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  1. #1
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    UK2 Aquires midPhase

    Just thought this was big news and figured people would be interested and like to know. UK2, who recently purchased Stargate's shared hosting, etc. has now purchased midPhase: http://www.thewhir.com/marketwatch/1...s_midPhase.cfm
    Karl Zimmerman - Steadfast: Managed Dedicated Servers and Premium Colocation
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  2. #2
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    K Well, there was a thread on this, guess they nuked it? :/

    Interesting move though. Any idea how much? The OP in the other thread said $10 million
    Personal Blog: Here | Currently Hosted By: GoDaddy | Twitter: @Quartz87

  3. #3
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    $10million? :O

  4. #4
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    Yeah, I believe Ryan had said something about it. He posted it in his blog here: http://anynoisry.blogspot.com/2007/1...-inc-sold.html

    I'm not sure how accurate that information is though, as to the amount, etc.
    Karl Zimmerman - Steadfast: Managed Dedicated Servers and Premium Colocation
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  5. #5
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    I got an email about it a couple of hours ago... here are the links they included:

    http://www.midphase.com/uk2/pr.pdf
    http://www.midphase.com/uk2/faq.php
    Matt Armour
    OpenReaction

  6. #6
    Wow $10 million, big amount. Lets see how this goes.

  7. #7
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    Quote Originally Posted by Quartz_ View Post
    K Well, there was a thread on this, guess they nuked it? :/

    Interesting move though. Any idea how much? The OP in the other thread said $10 million

    $10 million? yeah right

    I think someone got a bit enthusiastic with there zeros
    Host to avoid at all costs - Real Web Host

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  8. #8
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    Quote Originally Posted by Keith W View Post
    $10 million? yeah right

    I think someone got a bit enthusiastic with there zeros
    It says as a rumour in that blog and the OP from the old thread mentioned it. I didn't get enthusiastic about anything.
    Personal Blog: Here | Currently Hosted By: GoDaddy | Twitter: @Quartz87

  9. #9
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    Quote Originally Posted by Quartz_ View Post
    It says as a rumour in that blog and the OP from the old thread mentioned it. I didn't get enthusiastic about anything.
    As I wrote on my blog:

    rumors are that the company was sold for approximately USD $10m, but I would imagine the real figure was rather less.

  10. #10
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    Quote Originally Posted by Keith W View Post
    $10 million? yeah right

    I think someone got a bit enthusiastic with there zeros
    Hmm pretty good money in pockets. Why was the old thread deleted?

  11. #11
    Nice to see UK2 doing well. The good guys of the hosting industry

  12. #12
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    Quote Originally Posted by UltimaHostsUSA View Post
    Nice to see UK2 doing well. The good guys of the hosting industry
    Thanks

    If anyone has questions related to our acquisition of midPhase feel free to contact me directly
    Ditlev Bredahl. CEO,
    OnApp.com & SolusVM.com + Cloud.net & CDN.net

  13. #13
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    Quote Originally Posted by Quartz_ View Post
    It says as a rumour in that blog and the OP from the old thread mentioned it. I didn't get enthusiastic about anything.
    I didn't say you did
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  14. #14
    We're all extremely ecstatic to begin working with Ditlev and his team at UK2. Likewise, I'd be willing to answer any questions you might have about the acquisition. :-)

    Happy Holidays!
    Marc
    Marc Bollinger
    Sr. Technical Engineer - US Operations
    UK2Group.com
    midPhase | AN Hosting | WestHost | 10TB | Resell.biz

  15. #15
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    Wow! That's some big news.

    As to the people moaning about the 10 million figure... what's so hard to understand? I wouldn't sell either of my companies for nothing less then 1 million and I'm nothing close to the size of midphase.

    Good work UK2! Nice aquisition.

  16. #16
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    Quote Originally Posted by midphase-MarcB View Post
    Likewise, I'd be willing to answer any questions you might have about the acquisition. :-)
    come on, tell us. $$$ ???
    Sneaky Little Hobbitses

  17. #17
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    Actually 10 mil sounds between fair and a low-ball to me.

    http://www.webhosting.info/webhosts/...s/MIDPHASE.COM
    http://www.webhosting.info/webhosts/.../ANHOSTING.COM

    Midphase alone has 150k domains behind their nameservers, anhosting at roughly 8k domains, paying $7.95/month per account.. plus value-added services, and this reseller company.. there's potential for annual revenue well in excess of 10 mil.

    In any case I'm sure uk2 will do them well, Ditlev is good people. I've talked to him a few random times over the years and had the pleasure of randomly meeting he and some of the others at the Sheraton at this year's HostingCon.. I'll second UltimateHosts post.
    Corey Northcutt | Northcutt
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  18. #18
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    Quote Originally Posted by qwidjib0 View Post
    Actually 10 mil sounds between fair and a low-ball to me.
    That's EXACTLY how I figured it. Great post.

  19. #19
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    Yeah, but factor in aggressive affiliate payouts, churn rates, etc..me thinks the value is way south of that figure.

  20. #20
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    With 50,000 - 75,000 paying clients paying less than $10/month, and an affiliate program that pays out huge commissions, their annual revenue is far less than 10 million per year. I'd be highly suspect of an 8 digit payday. Seven figures for sure though.

    - John C.

  21. #21
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    Great news, I am waiting when UK2 aquires my company, I dont come costly.



  22. #22
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    Not only did uk2 buy the clients but you have to consider the cost of the brand they bought. From what I read somewhere, the company brings in roughly 6k new accounts a month. The brand is known and there is also the cost of the assets of the company. Not really knowing how many paying accounts they have its almost impossible to put good figure on it.

  23. #23
    Quote Originally Posted by MMH-Moe View Post
    Not only did uk2 buy the clients but you have to consider the cost of the brand they bought. From what I read somewhere, the company brings in roughly 6k new accounts a month. The brand is known and there is also the cost of the assets of the company. Not really knowing how many paying accounts they have its almost impossible to put good figure on it.
    That is also an asset, which was not mentioned in this thread until you did so, thank you

  24. #24
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    Quote Originally Posted by qwidjib0 View Post
    Midphase alone has 150k domains behind their nameservers, anhosting at roughly 8k domains, paying $7.95/month per account..
    That's not 150k x $7.95/mth. The 150k is just hosted domains, and not separate paying clients. I'm sure they have a lot of them, but no 150k paying clients.

    They have done well though. I remember when they started with a few dedicated servers, and a somewhat aggressive marketing/affiliate program. That was only a few years ago too. Hope they like Capital Gains Tax, if that's applicable to them.
    AussieHost.com Aussie Bob, host since 2001
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  25. #25
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    Small money for UK2 and just at the right time with the :$ exchange rate.
    Matthew Russell | Namecheap
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  26. #26
    Congrats to Dan and Zak, they have been trying to offload this company for a while which became increasingly difficult after T1R blasted them for lying, seems UK2 has a lot of money to burn and good for them.

  27. #27
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    LOL...10 million dollars, they are crazy. If they invest 10 million dollars in advertising they can get many more customers.
    openSUSE user

  28. #28
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    UK2's never had that kind of ready cash.

    seems most likely a false flag advert

    owm
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  29. #29
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    Quote Originally Posted by Outlaw Web Master View Post
    UK2's never had that kind of ready cash.

    seems most likely a false flag advert

    owm
    I wouldn't be so sure, with the exchange rate that's only around 5 mil. Basically they are saving almost 1 mil than say if they were to have purchased it a year or two ago.
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  30. #30
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    Quote Originally Posted by RossH View Post
    ...they have been trying to offload this company for a while which became increasingly difficult after T1R blasted them for lying
    Please expound.

    - John C.

  31. #31
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    Quote Originally Posted by Outlaw Web Master View Post
    UK2's never had that kind of ready cash.

    seems most likely a false flag advert

    owm
    Are you aware that UK2 are share holders within the Telecity Redbus group of Data Centres? I'd say that UK2 were worth a few bob now.

  32. #32
    Quote Originally Posted by JohnCrowley View Post
    Please expound.

    - John C.
    "MidPhase issues false information; Customer disclosures not likely accurate

    T1R's Monday research note on web hosting provider MidPhase included a factual error that was made due to the company providing false information in its disclosure. The company claims that it is an Equinix [EQIX] customer, but T1R has visual confirmation telling us that the company is actually a customer of RCN [RCNI - provider of video, voice and internet access services]. MidPhase was actually a ServerCentral customer housed within the Equinix facility in Chicago before moving to RCN. T1R regrets the error but is discouraged by the deliberate misinformation, which we can only guess is the result of a desire to deceive. As such, we take its recent disclosure of 75k new customers (and T1R's projected ~$6mn in annual revenues) with a grain of salt. This looks like another case of a small mass market hoster trying to make itself look bigger than it actually is. (P. Shih)
    "

  33. #33
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  34. #34
    Quote Originally Posted by RossH View Post
    "MidPhase issues false information; Customer disclosures not likely accurate

    T1R's Monday research note on web hosting provider MidPhase included a factual error that was made due to the company providing false information in its disclosure. The company claims that it is an Equinix [EQIX] customer, but T1R has visual confirmation telling us that the company is actually a customer of RCN [RCNI - provider of video, voice and internet access services]. MidPhase was actually a ServerCentral customer housed within the Equinix facility in Chicago before moving to RCN. T1R regrets the error but is discouraged by the deliberate misinformation, which we can only guess is the result of a desire to deceive. As such, we take its recent disclosure of 75k new customers (and T1R's projected ~$6mn in annual revenues) with a grain of salt. This looks like another case of a small mass market hoster trying to make itself look bigger than it actually is. (P. Shih)
    "
    This report is somewhat old. At one time, we did provide services in both Equinix AND RCN, which then became all RCN, and now is completely away from RCN in a custom center. We own all our hardware, network equipment, etc. in this new datacenter. (Moved our entire server line there in July 2007).

    We do our best to remain as transparent as possible, and assure you that any attempt at purposeful deception was never the intent. This report was likely produced at the time where we were at both facilities.

    Anywhooooo... We're happy to have UK2 on board!

    Happy Holidays everyone!
    Marc
    Last edited by midphase-MarcB; 12-24-2007 at 08:38 PM.
    Marc Bollinger
    Sr. Technical Engineer - US Operations
    UK2Group.com
    midPhase | AN Hosting | WestHost | 10TB | Resell.biz

  35. #35
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    Quote Originally Posted by nickn View Post
    Interesting post by T1R, but I'm sure UK2 did it's research. Congrats to UK2, and Midphase employees. Good luck to all in the future
    midPhase is an amazing company - they have managed to keep growing and still remain very profitable. Dan & Zak were very informative the whole way through, and KPMG (who we use for due diligence in US acquisitions) did a good job researching the business before completion.

    I won't go into details on the transaction obviously, but the posts below do needs commenting

    We have bought 3 main asset segments:

    - A fantastic client database (that generates way more than the 6M that T1R suggests), with a relatively low churn.

    - A fantastic growth (that is way higher than the 6k signups/mo suggested earlier in this thread), generated both by organic signups and their intelligent affiliate setup.

    - A fantastic team with a really strong experience within the industry. The last 24 months UK2 has been growing from 12-15 people to around 55 in our UK offices, we are a lot of 'new' hosting professionals and we will benefit greatly from getting more industry people on board. With this acquisition our full team worldwide is above 100 people. Future growth will mostly be out of our Chicago office.

    Again, feel free to ask me any question directly...


    D
    Ditlev Bredahl. CEO,
    OnApp.com & SolusVM.com + Cloud.net & CDN.net

  36. #36
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    Quote Originally Posted by Scott.Mc View Post
    I wouldn't be so sure, with the exchange rate that's only around 5 mil. Basically they are saving almost 1 mil than say if they were to have purchased it a year or two ago.
    5M /$10M to acquired 75000 customers isn't a bad deal - assuming you have a decent number of higher paying customers. It works to $133 per customer but many hosts (and us included at one point) were paying up to $100 per customer to acquire via affiliates.

    A loyal, long-time customer is worth a lot more than a lead from an affiliate too.

    This doesn't factor in the brand and operation that's already setup either.
    Matthew Russell | Namecheap
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  37. #37
    Quote Originally Posted by eming View Post
    midPhase is an amazing company - they have managed to keep growing and still remain very profitable. Dan & Zak were very informative the whole way through, and KPMG (who we use for due diligence in US acquisitions) did a good job researching the business before completion.

    I won't go into details on the transaction obviously, but the posts below do needs commenting

    We have bought 3 main asset segments:

    - A fantastic client database (that generates way more than the 6M that T1R suggests), with a relatively low churn.

    - A fantastic growth (that is way higher than the 6k signups/mo suggested earlier in this thread), generated both by organic signups and their intelligent affiliate setup.

    - A fantastic team with a really strong experience within the industry. The last 24 months UK2 has been growing from 12-15 people to around 55 in our UK offices, we are a lot of 'new' hosting professionals and we will benefit greatly from getting more industry people on board. With this acquisition our full team worldwide is above 100 people. Future growth will mostly be out of our Chicago office.

    Again, feel free to ask me any question directly...


    D
    Dan & Zak are both very good guys so I'm glad that you decided to buy their operation. Congrats are in order for everyone involved. It seems you guys are making a decent amount of acquisitions recently so I hope you guys can successfully integrate them into your current operations.

  38. #38
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    Quote Originally Posted by RossH View Post
    (...)It seems you guys are making a decent amount of acquisitions recently so I hope you guys can successfully integrate them into your current operations.
    In the midPhase case the actual integration would be minimal...It would be same servers, same team and same setup that would be used. We will surely step up the marketing efforts a bit, by adding what ever financial resources needed to take it to the next step.
    At some stage we might also help each other across the companies. But for now they will run as independent companies. MidPhase was not acquired to step in a ruin their setup by moving around support, clients and teams. Things are actually pretty fine as they are

    d
    Ditlev Bredahl. CEO,
    OnApp.com & SolusVM.com + Cloud.net & CDN.net

  39. #39
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    Quote Originally Posted by midphase-MarcB View Post
    We're all extremely ecstatic to begin working with Ditlev and his team at UK2. Likewise, I'd be willing to answer any questions you might have about the acquisition. :-)

    Happy Holidays!
    Marc
    I have one. What exactly happened with all of those employees that you let go prior to the sale? I was talking to a friend who used to work at midphase (not ryan), and he had mentioned a bunch of recent midphase layoffs.

  40. #40
    That's just not true, nobody has lost their job during this acquisition. We haven't let anybody go (unless they were terminated for an unrelated issue).

    Quite the contrary actually, we have been continuously hiring new staff.

    Marc
    Marc Bollinger
    Sr. Technical Engineer - US Operations
    UK2Group.com
    midPhase | AN Hosting | WestHost | 10TB | Resell.biz

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