Web Hosting Talk : Advertising Forums : Community Reviews : Other Reviews : How much is my hosting biz worth?

[tar4heel2]

Can someone give me an idea how to approach hosting company/customers valuation? I'm thinking of selling to a bigger fish but I have no idea how to ball-park the value of my company. Any insight would be wecome.

Phil

[Pheaton]

Basic formula:

MonthlyRevenue x 4-6months = Price

Of course, there are a lot of other factors to consider, such as if the clients are paying monthly or yearly.

[tar4heel2]

I had someone tell me 1.5 to 1 X Annual gross.

Anyone else?

Phil

[SoftWareRevue]

If you can get that; do it.

I think 8-10 months is pretty common.

[tar4heel2]

Really, 10 months? That doesn't seem like much.

Thanks...

Anyone actually sell a company?

Phil

[danushman]

General business sales are the annual revenues times two or three... However, in hosting it is often the annual revenue the business generates.

It depends a LOT on the type of accounts you have, though. If you are selling a lot of high-margin hosting such as reseller accounts and/or only month-to-month accounts and have a solid, loyal and happy clientbase it may be worth many times more than a years sales.

[eddy2099]

In the end, it is really Willing-Seller Willing-Buyer which determines the pricing.

In the past, it used to be worth more but not now. There are just too many web hosts now. As the rest said, there are a lot more factors at play here so it is hard to say what is the correct method of computing cost. Of course, the one purchasing it would want to recover their investment in the shortest time frame.


There is no guarantee that the customers that you take over would actually stay after the sale is done and as such, you end up with a name and no or few customers.

Besides, to the one buying the business, they will not recover their cost from those annual payment accounts and yet have to support them.. they may or may not be taken out from the equation when computing net worth.

[mdrussell]

Everybody seems to have a different method of calculating business value. You will find this due to a lot of different of hosting businesses around.

Comparitively few on WHT will own highly valuable fixed assets other than client base - hence the tendency to quote 6 - 12 months times monthly revenue.

[bradshaw]

yes its about 1 - 1.5 years revenue, or you could calculate it as 3-5x the annual profits, will come to about the same either way, the more successful your company is the more you can ask...

out of interest how many clients do you have?

However, WHT is different iv seen people say 1-2months revenue which is crazy.

cya

[cdgcommerce]

Value is in the eye of the buyer.

There isn't any really "easy" way to valuate a business. It depends on so many factors: how established the hosting company is, the value of its branding and marketing, the financial return on investment it is anticipated to provide, the types of clients, the anticipated attrition of the customer base, the anticipated ease of transitioning the hosting platform and billing to the new buyer, etc.

It -seems- like the going acquisition price for a lot of smaller hosts is 4-6 times monthly revenues. Larger companies that are more established and have larger client bases can typically command a lot more than that - it all depends on the circumstances.

[UH-Matt]

Yep, its hard to say. x1 annual revenue is a good guide but this is flexible dependant on your reputation/brand/assetts/size etc..

[H-U.net]

We just acquired a host with 277 clients for less than 2 months of their monthly rate.

Having said this, the administration was in a complete mess and billing had fallen behind by as much as six months in some cases.

It does all depend upon the brandability of your product/site and your current reputation and goodwill - that's where the multipliers really kick in.

If you can get 5/6ths of annual revenue for your business I'd consider this offer very hard indeed...

Kevin

[danushman]

Sometimes all it takes is a bit of convincing to aquire a client base
from a host-with-problems. .. for pennies.
Dan

[2Grumpy]

I was offered 1.05 x yearly revenue, 20% up front, 40% after 45 days, 40% after a year. I wasn't looking to sell but the buyer was a large company so I was quite curious to see how they valued us, I was flattered at the offer. And surprised to see even 1.05 times yearly offered.

[Aussie Bob]

If you're just buying a client base, then the price is somewhat discounted. If you're buying an established BRAND, with an excellent reputation and huge potential growth, then the price goes up.