hello
I’m thinking to buy a webhosting company
well they been running over 5 years and they earn good money
to start
Income Projection
Monthly: $37,533
Est. Annual
$450,396

company expenses monthly
for servers and staff and office rent
$22K
So net profit: $15,533
This work with out any advertising as the owner said.

Web site page rank 5
has good traffic in alexa rank around 40,300
monthly new sign up are around 150 to 200 new hosting account with price of $50/$90/$200/$640 plans
all are yearly paid no monthly the cheapest monthly plane are $60
it has customers with dedicated servers about 39 server each server profit $50/month.

If you thinking to buy out a company like this
that’s including the domain name and company registration name with the office furniture cost about 20K.

What you think you will pay for it as acceptable price?
I count it like 15,533 X 12 = 186396 X10 = $1,863,960
So I think paying $1,863,960 is so expensive and I have to wait for 10 years to get profit out of this company
What you think guys or can you give me estimate price for it?

sorry i cant give out any email or site name as I’m just requesting your help for the estimated price.

You say most plans are yearly subscriptions? If so, the value of the company would be worth much less. However, it's hard to say with the provided details.

Are the dedicated server customers on servers that you own? If so, what are the costs of them to keep them online and is this cost included within the monthly expenses?

waiting 10 years to start getting your investment back is too long in my opinion - the company seems like it's worth the investment but making a fair offer is also crucial - you should try to negotiate with the host and see how much they would be willing to sell for. Getting 1.8mil for a company that makes $15.5k a month in profit is a HUGE deal and it could be a rip off for the buyer since some clients are likely to move out because of new management.

You say most plans are yearly subscriptions? If so, the value of the company would be worth much less. However, it's hard to say with the provided details.

Are the dedicated server customers on servers that you own? If so, what are the costs of them to keep them online and is this cost included within the monthly expenses?

it's not my servers but yes the cost of the servers come off from the 22K/monthly

waiting 10 years to start getting your investment back is too long in my opinion - the company seems like it's worth the investment but making a fair offer is also crucial - you should try to negotiate with the host and see how much they would be willing to sell for. Getting 1.8mil for a company that makes $15.5k a month in profit is a HUGE deal and it could be a rip off for the buyer since some clients are likely to move out because of new management.

so would you think 5 X $15,533 would be fair?
i don’t want to make a move with out i make sure it's worth the price i will pay since 90% of the customers are yearly paid
only 120 customer on monthly payment and they pay in total $16810 that including servers customers & expenses cost also are covered from the income monthly.

I would say too...

waiting for 10 years to get profit is not worth it... how'll you earn you living in that case...

Consider opening your own company from scratch..... may be that could give you profit from the first year...

I would say too...

waiting for 10 years to get profit is not worth it... how'll you earn you living in that case...

Consider opening your own company from scratch..... may be that could give you profit from the first year...

but when i can get one of the top 3 company in the country is diffrent
the keyword her are most of there customers they getting comes from word of mouth by friends already are customers

Honestly, six months of revenue max, is the "standard" in most cases. Since you are buying an office with furniture, etc compensate for that as well, but if they are yearly clients, get an accountant, sit down with their accountant / billing and go over all the financials, and most importantly make sure the books are straight, the customers are real, and they have a good amount of billing info on them all.

Six month revenue is more than fair in this case as annual clients can and do leave at the end of their terms, they've already paid the previous owner for their service and he is leaving you to deal with the operating costs he was already paid for.

Some may disagree, but that is where I would go.

I've just sold off some of the budget clients at the price of 1 year subscription fees.

Honestly, six months of revenue max, is the "standard" in most cases. Since you are buying an office with furniture, etc compensate for that as well, but if they are yearly clients, get an accountant, sit down with their accountant / billing and go over all the financials, and most importantly make sure the books are straight, the customers are real, and they have a good amount of billing info on them all.

Six month revenue is more than fair in this case as annual clients can and do leave at the end of their terms, they've already paid the previous owner for their service and he is leaving you to deal with the operating costs he was already paid for.

Some may disagree, but that is where I would go.

i'll arrange to set with them and go with all financial and will see if it's worth it or not
Thanks for your advice

If you are even thinking about investing that much in a company I wouldnt do anything until you have an experienced finacial analyzer who is experienced with online businesses look at the companies profits, margins, past income/expenses etc...

I would pay 2 years earnings at most. Otherwise, I'd dump that money into making your own company.

That's 2 years total income btw, not profit.

Yearly payments usually indicate this is a overselling host. Overselling hosts IMO is not worth as much.

btw is this company you are trying to buy located in Toronto, Canada ?

Honestly, if you have to ask here then maybe you are not ready to buy a company for $1.8 million

Well, when venturing on investing into anything there's always a risk. But you have to be really sure that you are prepared and ready to take that risk. It may be a good investment but if you'll ask me, with that kind of investment, I would rather build my own. With proper management and promotion plus good service you'll eventually get your name known, although its not easy.

i'll arrange to set with them and go with all financial and will see if it's worth it or not
Thanks for your advice
You can try to negotiate by paying on a renewal basis by the client. Pay him a deposit first (20-30%) and pay the remaining upon renewal from the client. In this way, it can protect you from non-genuine client or the already unhappy clients switching host.

waiting 10 years to start getting your investment back is too long in my opinion - the company seems like it's worth the investment but making a fair offer is also crucial - you should try to negotiate with the host and see how much they would be willing to sell for. Getting 1.8mil for a company that makes $15.5k a month in profit is a HUGE deal and it could be a rip off for the buyer since some clients are likely to move out because of new management.

I agree here, no matter how great the provider is - in the industry there is a large turn over of clients. Also, look at the Fischer Plaza data center fires a few months ago. Imagine if a fluke disaster like that were to happen at your data center.. You could lose a large amount of your clientele and 10 years is too long to recoup an investment in the hosting industry. We cannot even foresee if dedicated servers will be a profitable business at the rate of advances!

You say most plans are yearly subscriptions? If so, the value of the company would be worth much less.

That depends a lot on the specifics, like customer retention rate etc. This looks like a decently established business, not a 100 accounts, 6 months old hosting company selling yearly accounts, where the customer flight risk is quite huge.

I count it like 15,533 X 12 = 186396 X10 = $1,863,960

Way too much, in a business where the landscape changes so fast. You're better off putting money in the bank, near zero risk and no efforts on your part. :)

I don't think people want to buy a company that has yearly plans rather than monthly ones, they need a constant stream of income.

I would pay 10 months of revenue max. Anybody who pays for over a year or 2 is just getting ripped off usually.

I think a lot of the value of this company is the "goodwill" aspect.

If this is one of the top 3 hosting providers in the seller's country, then the "goodwill" factor must be seriously considered as part of the assets being sold.

That being said... a 10 year payback term is way too long.

Even with a high amount of goodwill, I would never purchase a company that had more then a 2 or 3 year payback period. (3 years being the absolute maximum if it's an amazing company, with 10+ years of history, etc...)

We routinely purchase smaller hosts (under $100k yearly revenue) and never pay more then 1 year of net profit value.

Any seller who wants more, is more often then not, suckered into some "sweet" deal with some cash payment upfront, and then ripped off (not paid the remainder) after they turn over the server and billing access. Greed makes people do stupid things.

Hosting companies usually go for 1.2 to 1.5x their yearly gross.