I'm looking for advice on selling our web hosting business and am looking for experience from others who have done this.

We currently own our own hardware and are colocated in a data centre and use a custom built control panel. I'm not interested in finding a local owner who will take over the hardware and operate the business as it stands as I don't want to be involved in training and continued operation, I would prefer to find someone to purchase our customer contracts.

We have been offering hosting since 2002 on linux platforms only. Our motive for selling that hosting is simply not our core business and no longer want to continue supporting it.

A few questions that come to mind.

* Were you able to find a buyer that honored current customer contract terms?
* How did the migration go? Did the buyer handle migrating the customers to their servers or have an efficient process in place?
* As a domain reseller, did you find a way to easily transfer control to the buyer?

Any experiences or advice would be greatly appreciated.

Thanks.

In our experience it's best that you find a buyer that is not looking to scalp all the $$$ they can from the clients. That being said, you need to work with the new owner to transition your clients. We require time from the old owners for 1-3 months to ensure all of their clients are well taken care of. As for the contract terms, we usually find the closest package price wise and bump them up to the next highest in resources.



Kind Regards,

In our experience it's best that you find a buyer that is not looking to scalp all the $$$ they can from the clients. That being said, you need to work with the new owner to transition your clients. We require time from the old owners for 1-3 months to ensure all of their clients are well taken care of. As for the contract terms, we usually find the closest package price wise and bump them up to the next highest in resources.
Kind Regards,
I think this is a decent plan. How many accounts are you talking about here?

My advice is remember your customers are #1 and if you must sellout than find someone with a true intentions and experience of running a business. If you decide to start up a new venture later on the respect of your clients may prove important. Even if you continue in another line of work weather a 9-5 job or self employed than how you treat others helps measure someones value in our career opportunities.

Thanks for the replies.

mclanea, we're looking at about 150 hosting accounts with an additional few hundred domain only accounts.

Does anyone have advice on how to go about finding a buyer? Approach hosts directly or posting to forums like this (well, in the offers section of course).

We currently own our own hardware and are colocated in a data centre and use a custom built control panel

I'd suggest talking to your DC and others you know at the DC, a lot of "handover" acquisitions are thrashed out over coffe at a datacentre, and it could mean a minimal amount of distruption to the clientbase.


* Were you able to find a buyer that honored current customer contract terms?

In almost all cases where we have taken on a clientbase, we have honoured all existing pre-paid periods and contract terms.


* How did the migration go? Did the buyer handle migrating the customers to their servers or have an efficient process in place?

Depends on the buyer, every sale/purchase finds new obstacles to overcome ... Going form like-to-like control panels, support systems and billing systems is usually "by the numbers" and very smooth. Anytime something unique or custom comes into play there are scrpits to write, plans to make, tests to run and faults to find, as well as the innevitable c0ckup or two.


* As a domain reseller, did you find a way to easily transfer control to the buyer?

Taking on a domain reseller is usually as simple as getting the username & password to the reseller account...


Any experiences or advice would be greatly appreciated.

As the seller, document *everything* before you start to sell - list the hardware, purchase date, warranty date, specification, locaion, password, access/reboot instructions etc
Tidy up your billing - chase all the non-payers, then suspend and terminate them as necessary, prune them from the accounts system.
Close all o/s support issues (no not just clicking the close button ;) make a summary of tickets/month for the last 12 months etc)

Only go with a buyer you feel comfortable dealing with.
Use an escrow service if possible.
If there are physical assets involved you might find selling those separate easier (not every buyer will want them).

And most of all - good luck :agree:

You can find a buyer by posting exactly what you are selling and whom you want to sell to.

Be very specific about WHO you want to buy the company. This will help to weed out the smaller offers that just want to rip you off.

Then, you can call anyone you want to look more closely at doing business with. You'll quickly find out if they are appropriate or not, for what you want to do.

In other words, you can narrow down the field by being very specific in your advertisement. Then narrow it down further by actually talking to the people who interest you. A 5 minute phone call will tell you if they are right or not.

As far as migration goes, you need not be involved so long as you allow the purchasing web host to continue running the customers for a month or two on their existing servers.

We've had to remove several posts from members offering to buy these clients. This is not allowed here in the main forums, and the OP has not yet offered them for sale.

For valuations, use DCF at a reasonable cost of capital (I'd say riskless +2-5%) and don't monkey around with terminal value too much. As a sanity check, use industry-accepted multiples, which are based (sadly) on revenue not profits or ROA or ROIC.

Use the usual rule for assets (book value) and cash on hand -- it should manipulate final price, but not be affected by multiples.

I can tell from the OP that he is serious/honest, but it still needs to be said, that the seller needs to commit to 'not soliciting' the customers after the sale.

Whats the expected sale price of a company in terms of revenue to price ratio?

Whats the expected sale price of a company in terms of revenue to price ratio?
It is completely dependent on the type of customers you have. If you have longterm customers that are all paying a high monthly price, then you are much more likely to get a higher sale price then if you have lots of new customers who are all paying $10/year for unlimited everything.

Don't let your customers know you are planning on selling until the deal is done. And then keep open the communication with them and the new owner.

When we sold - it went offer pretty well. We moved the MSSQL databases first and re-set those connections. And we changed the TTL on the domains to about 15 minutes the day before. In all, it was pretty simple - we did a lot ourselves moving the customers.

But if you are selling the datacenter to someone locally, there should not really be in downtime, right?

For getting the price, they looked at how long it would take to re-coup their ROI on each customer. I think it was about eleven months. They also lucked out on a few of them - since we only offer Windows hosting some customers had *NIX elsewhere. These customers moved their hosting to the new company in about two months.

Sure, there might be some customers that leave and you might want to address that in your contract that your attorney writes up.

Don't let anyone on this forum try and tell you how much your business is worth. You hear things like "the going rate is x months of revenue", etc.

Your business is worth what you feel it is worth and if the buyer agrees you have yourself a sale ;)

And on that note... GET A LAWYER too! Have them advise on how you should handle the sale and all paperwork involved. Trust me on this. I have seen things happen that you won't believe in this business. Legal fees and losses after the fact can be worse than the extra cost up front and during the transaction.

Good luck!

I'd suggest talking to your DC and others you know at the DC, a lot of "handover" acquisitions are thrashed out over coffe at a datacentre, and it could mean a minimal amount of distruption to the clientbase.


In almost all cases where we have taken on a clientbase, we have honoured all existing pre-paid periods and contract terms.


Depends on the buyer, every sale/purchase finds new obstacles to overcome ... Going form like-to-like control panels, support systems and billing systems is usually "by the numbers" and very smooth. Anytime something unique or custom comes into play there are scrpits to write, plans to make, tests to run and faults to find, as well as the innevitable c0ckup or two.


Taking on a domain reseller is usually as simple as getting the username & password to the reseller account...


As the seller, document *everything* before you start to sell - list the hardware, purchase date, warranty date, specification, locaion, password, access/reboot instructions etc
Tidy up your billing - chase all the non-payers, then suspend and terminate them as necessary, prune them from the accounts system.
Close all o/s support issues (no not just clicking the close button ;) make a summary of tickets/month for the last 12 months etc)

Only go with a buyer you feel comfortable dealing with.
Use an escrow service if possible.
If there are physical assets involved you might find selling those separate easier (not every buyer will want them).

And most of all - good luck :agree:


this is the best post of the bunch here - Rob didn't miss a beat on what is required.

every sale/purchase finds new obstacles get ready for them

the first thing you will find once you put it for sale the tire kickers who will offer you $2000 for everything you have and really waste your time and others who are interested.

if you are going to post it put down min payment and terms as well example -- No 6 year payments terms

i have been a buyer 4 or 5 times and every time i won i was not the highest bidder - but i was the only one who paid what i said i would pay