Hello,

i would buy a new hosting company but i can't undestand if it is a good price, the company have 10 dell server 850, about 4000 domains for a yearly incoming of 95.000$ and he would sell it for 130.000$ what do u think?

Thanks

It would depend on the rest of what is included, the amount of profit etc etc.

You are thing of buying it. Hmm. Looks not good for me. The asking price is kinda big. If it whould be lower I would buy it.

You are thing of buying it. Hmm. Looks not good for me. The asking price is kinda big. If it whould be lower I would buy it.

Don't step in if you don't really know what you are talking about.

In regards to the OP generally people ask for about 6-8 months profit and some 12+ months if its a well-established host. Make sure you meet the person if you are willing to spend that much, I'm sure a cheap flight and hotel won't be out of your reach at that asking price. Don't forget a contract, etc.

Check out the quality of their servers, ask to seem them if they co-lo, their profit margins, customers, their customer retention, and so forth.

Good luck!

Hello,

i would buy a new hosting company but i can't undestand if it is a good price, the company have 10 dell server 850, about 4000 domains for a yearly incoming of 95.000$ and he would sell it for 130.000$ what do u think?

Thanks
Obviously you will want to meet this individual, check out all of the specs, verify all of the payments these customers are making, etc.

Once you have established this person is not trying to scam you, you will want to find out what the churn:retention ratio is, and determine when you will most likely make up the purchase price and begin turning a profit.

If this time period is within your liking, then you have yourself a deal, if not, then you should renegotiate to a price that fits the situation. Also consider, if the servers and business are coming with the purchase, then you should expect a higher price than if you were only purchasing the clients, as you are purchasing a reputation as well.

Assuming it's a well established host with low cancellation rates, it doesn't sound bad at all.

You are thing of buying it. Hmm. Looks not good for me. The asking price is kinda big. If it whould be lower I would buy it.
The sale includes hardware of 10 servers and probably spares etc. I'd like to see the running costs of those servers, with the colo etc. Maybe they're all in 1/2 cab and using not that much bandwidth. Depends on what deal they got with their colo.

If a host was to buy that business, depending on their colo deal, might be better for them to leave those servers where they are, than migrating clients to new servers. Migrations with newly acquired hosting companies does not always work out, so sometimes it's best to leave them undisturbed, if possible.

But if it all checks out, if the brand is good (etc), the asking price is not unreasonable, imo.

seems like a good deal but you have to be careful and make sure that you do not get ripped off

The safest way is to invest the 130k into your own, and start fresh.

Hello adapter,

I agree with the suggestions of 'PixelManual (http://www.webhostingtalk.com/member.php?u=118753) vbmenu_register("postmenu_3840124", true); '& 'ALL Acquisitions (http://www.webhostingtalk.com/member.php?u=81452) vbmenu_register("postmenu_3840503", true); '. You better go and meet the concerned persons, check the income proofs from last 8-12 months so that you can be sure you will have a profit making system in hand and the deal is not scam. Invest sometime online to check web reputation of the company.

BTW, I'd be interested to have a look at the company's website if that is not an issue with you.

yes and starting your own is a good idea as well

but i still recommend the deal as well, just be careful when you are buying

Seems good deal to me. I would suggest to check their track record and existing client base before making final deal. BTW do you have tried for negotiation on price?

I too would say the deal sounds OK.

There are a lot of metrics used by the M&A banks out there, which apply pretty well even at the smaller hosting companies.

1 x (1 Year Revenue) = $95k
+ Assets = ~ 10 servers @ 2k each = $20,000
- Liabilities = ??? [look if they signed 3 year contracts for bandwidth]
- Liabilities = ??? [look for debt such as leases on that $20k of servers]
---------------------------------
$115k minus any liabilities.

so $135k isn't unreasonable. Note some M&A's on 'recuring revenue' model businesses (like voip, web hosting, dialup ISP, phone co's) get as high as 3 x 1 year's revenue. Hosting is at the low end usualy closer to 1 x revenue due to churn rates, and very high competition (plus low cost barrier to entry for new competition)

One last suggestion: make sure your deal includes paying only for customers that don't cancel in the first few months after change in ownership. Also include a non-compete clause so after they sell you the business they can NOT go back in business for 2 years to compete with you in the same 'market' and especially not steal back your customers.

Good luck on the venture, my opinion is its not too far out of the range of what looks normal - they may have other assets that add up to the rest of thier $135k price tag (like a special software only they developed that helps sell servers).

Dell 850's are worth $2k/ea nowdays? Try around $750/ea, new.

I'm guessing the $95K is after taxes and expenses then it's a pretty good deal. If it's a host with 4000 domains then he's bound to be pretty good. Still do the research, this is a big chunk of cash.

Let us know how things turn out.

I'm guessing the $95K is after taxes and expenses then it's a pretty good deal. If it's a host with 4000 domains then he's bound to be pretty good. Still do the research, this is a big chunk of cash.

Let us know how things turn out.

If its $95k net profits, thats not at all bad.

However, if its $95k gross, thats $2/mo hosting (average acct!).

The safest way is to invest the 130k into your own, and start fresh.
heh, I actually agree with that. :eek3:

I'd much rather start from scratch, and organically build a client base, than buying one. Where's the fun in that? :uhh:

heh, I actually agree with that. :eek3:

I'd much rather start from scratch, and organically build a client base, than buying one. Where's the fun in that? :uhh:

I would agree.

You can innovate / develop your own ideas when you build your own business. When you take on alot of clients, you have little room to make changes.