First of all, I am sorry if it is a wrong section.
I am going to purchase an established hosting business active from the last 6 month. They have monthly sales of 8000 Euros & 1800-2000 Euros net profit every month. This is a dedicated servers reselling business. I am in contact with their administration, but I am not sure what will be it's worth. currently, they have about 35 dedicated servers client & mostly are with them from the last 3-4 months & purchasing more servers regularly. It's growing & selling 8-10 new servers every month.
I have reviewed all documents & records in details (I wouldn't like to disclose here, sorry), but I am confused what bid should I offer. Can someone help me about it's worth. What bid should I offer? I want to acquire this & want to offer them some realistic & reasonable bid.
Depending on how long they've been in business, their churn rate, and a lot of other factors I'd probably not offer more than what their 12 month revenue is (actual revenue, not projected revenue). If it's a new company or doesn't have a long track record I'd adjust accordingly.
Again, I'm just throwing some basic information out there.
Actually, It's my friend company & he is in hosting business from the last 4-5 years. Few days back, we were discussing about businesses & I told him that I am willing to start my own hosting business. He told me that it's not quite easy & he has separate Shared, reseller, VPS & dedicated servers business & if I have money, he will sale vps & dedicated servers business as he is happy with shared & reseller plan. VPS & dedicated is a burden on him & if I really want he will sale.
I asked him many times about BIN, but he is saying that make some fair offer & he will consider. So, in this situation, I don't want to offer any non-sense bid & present myself a fool. That's why, I am asking for help.
Everything is genuine & okay. 2000 Euros is monthly net profit from 40 dedicated server clients. Should I make an offer of 25,000 Euros? Is it good one?
The simplest way is to know their net assets value in their balance sheet..your bid should not be more than their net assets.. and if they ask for any business goodwill (future prospects) it should be more than the average of their 6 months earnings...
further the intangible factors are like in how much time you can get your investment back.. or come to break even point...your part in management etc..
It sounds like you are just buying the dedicated customer base.. no domain name and site to go with it.
That to me presents a large issue. You will not grow for a while. You will have to establish a name and create your own customers. He is currently generating them from his already established hosting company.
You should give that a lot of thought. Now, if he built a site for the dedicated and VPS servers side of the business, then that is different. That would be in your favor. Otherwise, you will have a lot of work ahead of you to start getting customers of your own.
Also, it sounds like he just started into the dedicated server and VPS side of things, and decided it is too much work for him to keep up with. Make sure you are up for the challenge. As such, are you a server admin? If not, you will need to hire people, and that would negate your profits right off the start.
From the info provided so far, I feel that the $25,000 bid is far, far too high. It may be worth that much to him, but he started it, and has the position to keep growing it. Also, if most of the new servers are from the last 3 or 4 months, then you don't know what their churn rate will be. They are all too new.
Think about that, and go from there.