One of my friends is selling his small webhosting company, its got around 100 clients, paying from 25-100$/monthly each.

4 Servers with ensim and cpanel.

How much should i pay him? Whats the going rate?

And if i buy, how should we communicate this to my new clients?

Thanks


/anders

How much should i pay him? Whats the going rate?

(1). What is the exact monthly revenue?

(2). What are the exact monthly costs?

And if i buy, how should we communicate this to my new clients?

Tell them that you've acquired another hosting company. Happy days!! :D

hi aussie, thanks for your reply...

Naturally - before i would buy id get more info like that...But for now i dont know it.

I know he has servers on cogent, so i dont think the cost will be to high. I'd say that monthly turnover is around 4-5000$

He is selling the company becuz he is going to travel the world.

Any input?

Four servers seems like a lot for just 100 clients. Would anyone else agree?

i know that many of his clients runs adult sites - so 4 servers for 100 clients is not at all to much... With mysql and php sites...

In fact i know that he has had load problems from time to time.

Hello,

Well depends on what kind of clients he's got. If he's got clients having heavy loaded web sites, that should be fine to have 12-13 per server. It could be also a sign of reliable servers.

For example we do not allow more than 10-15 reseller per server. And for virtual hosting, we allow C1 Class which means 256 sites per server. I know lots of famous hosting companies who overload the servers with 500-700 sites per server.

mikeknoxv, if they are just normal clients for US$7-10 ( However as he mentioned 25-100, mostly looks like a reseller hosting ) I do agree with you. But if they are heavy loaded web site, I do not agree with you .

Have a great day!

Originally posted by BwBroker
hi aussie, thanks for your reply...

Naturally - before i would buy id get more info like that...But for now i dont know it.

I know he has servers on cogent, so i dont think the cost will be to high. I'd say that monthly turnover is around 4-5000$

He is selling the company becuz he is going to travel the world.

Any input?

Do you think you can handle the support/marketing/administration on your own?

Are you going to have to hire technicians to answer support tickets/email/etc.?

These are a couple of things I didn't think about when I *almost* started my web hosting company.

Thanks for your answers...

Hmm...not that this should be part of the discussion, I was simply asking for a price, (not if there was to many servers, or if I could handle the support, etc..) but yes, i just hired two techs, and im looking at one more...so yes. And adding 100 clients more would not give me to high a workload...

Now - to get back on track ;-)

What would the clients be worth?
Isnt there any kind of basic going rate like 3 months revenue, or something like that to give me an idea what to offer him?

tnx

Rather than trying to find a generic "going rate," you should consider what the clients are worth to you. How much does it cost you currently to acquire a client through other means? Assuming that these clients are pretty similar to the ones you already have (and they may not be, but start this way), if it's costing you now, say, $20 in advertising/marketing for each signup you get, would it be worth spending more than that to quickly acquire 100 clients?

How long have these clients been with him? Would bringing them on create a more stable company for you, or would they not likely be around long?

So there are a lot of variables, but you could probably expect to pay three to six months of revenue for clients who have been in place for a year or so from a small, relatively unknown company. Low-cost clients, though, are less stable generally than high-end ones, so look at the short end of the range for $5/month clients and even beyond the high end for $50/month and up clients.

There is an unwritten rule in sales and negociations.

"He who talks price first, loses."

Ask him/her how much they want. Then come back here and we will let you know. :)

How about the following formula:
1) Find out what is the total yearly income after expenses.
2) Find out how much of your time you have to spend to support the business.
3) Determine the value of your time and substract from #1.
4) Now see how much money you would have to invest into a deversified portfolio (similar risk) to get exactly same income.
This is the price I'd ask if I'm to sell my business. I don't know if this is the right approach, it just sounds right to me.

Anyone want to sell?

Just reply with a private message.