What can be the exit strategy for most of the performing hosts?

What exactly are you talking about?

What can be the exit strategy for most of the performing hosts?

Selling the business to another hosting company that will take over running it or migrate the customers.

Looking for more funds or transfer/sell your customer base to some other major hosts

You should get the realistic idea about what your business is worth as on date and its future profit making ability. You should make good impression of your business and prepared to answer the buyer’s general first question, why you're leaving? :uhh:

Ok, the only thing here is to transfer your customers to some other hosts..

Calculate life time value of your customers.

Calculate life time value of your customers.
I wouldn't call them "life time value". It's not like you're going to be offerring hosting services in 10, 20 or 30 years time. The technology will no doubt be superceded. Hosting as we know it, doesn't have a lifespan of more than 10 years, imo.

An exit strategy for any successful host would be to sell. An exit strategy for an unsuccessful host would be to find another host to take over your business, or give your clients notice that you're closing shop.

Aussie Bob,

If he is not calculating the life time value of his customers say for 5 years, how he can be able to calculate the worth of his business? As he want to transfer the customers to other host only, to exit.

If you are concerned with how your business does after you exit, it is very important that your day to day operations are indepedent of you and you have professional and responsible staff that can take care of all operations under the new owners. I've seen too many owners exit believing the newer owners will be able to "figure out" things on their own.

Your value of the company depends on your market, your signup volume, your attrition rate, the number of customers, your gross revenue, your expenditure and brand awarness. It hardly ever depends on the lifetime value of your customers. Generally, I've seen good companies selling for around 2 to 3 years gross. Startups sell around 1 year gross.

Aussie Bob,

If he is not calculating the life time value of his customers say for 5 years, how he can be able to calculate the worth of his business? As he want to transfer the customers to other host only, to exit.
The worth of his business is only what someone is prepared to pay, and as each year slips by (as the market becomes more saturated etc), that figure is becoming less and less.

So you have a market place that's becoming more and more competitive and saturated, and you have an industry that's going to be largely redundant in the next 10 years.

If I am not wrong, I think your point is to leave it to the buyers to determine the worth of his business. :rolleyes:

If I am not wrong, I think your point is to leave it to the buyers to determine the worth of his business. :rolleyes:
If you can get your head around it, yep, that's pretty much it in a simplistic nutshell. Change your above "buyers" word to "market" and you have it. The market finds its own pricing, and for something like a webhosting business, it's open to each buyer's perspective and how much they're willing to pay for the asset, as to what determines market value. In commerce, market forces largely determine pricing. They always have, and always will.

The seller obviously has a price inmind, what they want to sell for, but if that asking price is above what the market is prepared to pay, then the seller most likely won't sell. Basic laws of trade commerce apply. The buyer and seller must meet together, with a mutually beneficially agreed price, if a transaction is going to take place.

A hosting business is only worth what someone is prepared to pay for it. That's the bottom line. It also depends on how motivated the seller is too. So many variables to consider.