You need to take into consideration their renewal rate and what control panel is used. also I think the rule is if the renewal rate is below 50% walk away as you would be buying duds.
Please anyone correct me if I am wrong. It also matters if you feel you have a chance of keeping the clients as there is always the risk you will take over the clients and then they realise this and walk away unfortunately that is just the way this business is.
Think carefully on what you can offer them is there a usp that will keep them or are you hoping to keep them without much work?
I would also ask for hard copies of financials screenshots of whmcs stats etc for your own peace of mind.
From shared hosting to Excellent value Business hosting on dedicated servers.
Value and great service always with that personal touch! Been in hosting business 6 years +
█ YagHost - Pure SSD Hosting | Since 2007 | Average Response Time: 15 min
█ Web Hosting | Reseller Hosting | Managed VPS Hosting
█ 99.9% Server Uptime Guarantee | 24/7 Rapid Response Tech Support | 30 Day Money Back Guarantee
█ LopHost.com - Web Hosting Tutorials
If it's a really good fit and the sellers numbers are valid, I'd suggest 0.8 to 1.0 x Est. Annual: $6493.01USD. There's a lot goes into a good fit. You can review posts to this forum and see what people ask for when someone wants to sell. In the end, it's worth whatever you're willing to pay based on the info you receive and believe from the seller.
2.5 - 3k, really? Times have changed since I last acquired a business but it used to be roughly three times the annual income..
For a B&M business with revenue can be documented, is easily reproducible and isn't as cut-throat as hosting then 3x annual income would be reasonable. Unfortunately the hosting market is brutal and smaller companies would be lucky to get 1x annual income.
2.5 - 3k, really? Times have changed since I last acquired a business but it used to be roughly three times the annual income
when your talking about a hosting company that has no tangible assets your basically buying the client base IE: they lease everything Dedicated servers ip space, etc, etc, its the norm.
If they have their own infrastructure in place,own hardware own ip space, etc, etc then the pricing will fall more in line with the
three times the annual as its a much more attractive buy for the new owners
The figures are too low, with lack of detail. I would say take a pass on it.
The majority looks to be annual customers, in the subscription based business without much information I would say this will end up in a quick loss. You will also have to carry the cost of the customers perhaps for a full year to even see how things will work out.
If theres 1 thing you should not do is gauge the numbers from a WHMCS summary.
My opinion is high risk low reward. Offer a buyout based on renewals.
My advice is to invest $3-$4k in your own company, than buying another company.
█ Michael Vlastos
█ HostWired.com - Innovative Hosting Solutions since 2005 | cPanel, Softaculous
█ Personalized support | No site suspensions | No overloaded servers | Green Hosting
█ Multiple Backups | Average Response Time: 20 min | Toll Free: 1-855-ECO-HOST
there is no quick and easy answer.
One thing to note is that it is extremely difficult to find good clients. In fact, several providers pay affiliates $50 per genuine lead. So if you have 167 clients (give or take) x $50, that means that depending on how you look at it, these leads are worth over $8k -> now that is just something to think about.
That said, I do bid on companies on here and on flippa. Here is how I approach the question
if you are buying to merge clients with your own brand:
0.5 x yearly profit (about $2.3k in this instance)
if you are buying to run as your own brand, that is, you plan to keep domain, site, everything running as it is and you dont currently have a hosting company of your own:
0.5 x yearly profit + 50% to 100% of software and licenses (as you will have to buy them anyway if you were to start one from scratch) + $500 to $1000 for the site design (if it is unique, $50 if its just a template) + something for the domain and any goodwill attached to the domain.
to explain what i mean about goodwill, is that if there are a number of really good reviews out there, and there is seo and backlinks on several really good places, this alone can be worth thousands of dollars. This also means that your site will generate some leads on its own. Even getting something in prweb costs a fortune.
if i didnt have a brand at all, then depending the other things i mentioned+ (software, sitedesign, seo, goodwill), it might be worth $6k.