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  1. #1
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    Question selling a web hosting business

    Hi all,

    I am planning on selling my hosting biz this weekend and wondered if I can gather some tips on selling before I go ahead. I have learnt from experience that whenever you are selling something here on WHT - presentation is half the game.

    1: What information would you be interested in the most if you are a possible buyer? I'm gathering a report on a word doc, I've listed some below, please let me know if you think anything important is missing:

    A: Number of clients and revenue
    B: Type of plans offered and their usage
    C: How clients found your service
    D: Detailed description of the service and support offered

    2: What price are you willing to pay for a host? 10 X Monthly profit? 10 X Actual revenue? 24 X Revenue? Personally I think 10 X last 3 months average revenue is about right.

    3: I wish to find a reputable name for my clients. Any tips on attracting more established providers? The big dogs? Or are they just not interested in small clientbases?

    4: What important terms form a NDA agreement?

  2. #2
    As you say presentation (and first impressions) count.

    I think you'd be looking at either 1.5 times turnover or 3 times profit but in reality its what someone is willing to pay. You'd clearly have to show accounts for the last few years and turnover and profit margins over time. As well as documenting any liabilities, debtors, creditors etc.

    Make sure your web site is up to date and complete. Its what sells your business and the first place a buyer will look, it can also say a lot about the state of the business (as can your forum).

    Its also amazing what you can find out about a person and their current and previous ventures using google.

    Are you really going to worry about your clients after selling? At the end of the day once you are gone you are gone and you won't be doing business with them again unless they are personal friends. So if its business treat it as such. With the best will in the world you can't influence what happens after the sale even if you think you've sold to the best outfit.

    As for NDA's if you can't afford to sue and also prove any breach I don't see they are a lot of use and their jurisdiction could be dubious depending on where you are based and where the buyer is based. Can you afford to get one drawn up?

    Given you are probably passing on the liability for servers etc under contract then you will need to document exactly what servers etc you have, where they are, length of contract left, fees etc as well as what is running on them, warrenties/support contracts etc.

  3. #3
    Join Date
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    Why don't you ask people who have already sold their business?

    You are definitely going to need facts and figures. A sales pitch is all about communication. What are you trying to convey?

    Overall my biggest tip for you is don't sugarcoat what you have. The biggest corporate crooks in America lost when they "cooked the books." So just come up with a good power point presentation to start with and you should be okay.
    TWC, LLC - USA based w/ three teams behind us!
    We will beat any web development or design quote

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  4. #4
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    How the clients are currently being billed is another very important factor in the sale of a web hosting business. 500 customers on recurring subscriptions are far less likely to cancel service than 500 customers manually paying their bill every month.
    SHAW NETWORKS Simple. Professional. Reliable. Web Hosting Done Right.
    Low Cost & Award-Winning: cPanel Reseller Plans 24/7/365 Live Technical Support
    Website: www.shawnetworks.com Fast Response E-mail: sales @ shawnetworks.com
    Sick of downtime? Fed up with excuses? Drop your host! Switch to Shaw Networks.

  5. #5
    Also include if they are on monthly or annual payment terms.

    Also make sure its known wether they pay via credit card or paypal or whatver other means.

    As others have said, be upfront about your figures and then hopefully you'll find a company that will be what you think its worth and is a good fit for your clients.

    Best of Luck with the sale.(I'd suggest posting it here on wht when you do sell )
    Data Republic - UK Managed Servers - Server Management - Managed Backup/R1Soft
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  6. #6
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    I watch the ad forum where hosts do post their businesses for sale, and there's been some great layouts and some terrible layouts. I forget the great layouts, but they really do make a difference when advertising for a buyer.

    Some woffle on waaaaaaay too much, with too much information. The main info that I look for is firstly the client numbers and then the revenues, then the control panel used, and cost of server inventory - if the servers are rented or coloed and asking price.

    From those few pieces of information a potential buyer has a lot to work with and acts as the first filter. Then they can get down to the finer details, but it all comes back to revenues, control panel, inventory, and asking price, as far as I'm concerned.

    So an ad that would appeal to me would be something like this -

    Selling hosting business, great brand, been in business for 4yrs.
    Clients: 2,580
    Revenue: US$495,500.00/yr
    Control Panel: Cpanel
    Inventory source: coloed own servers
    Asking price: US$675,000.00

    Email for an NDA.
    AussieHost.com Aussie Bob, host since 2001
    Host Multiple Domains on Fast Australian Servers!!

  7. #7
    Seems to me you should have plenty of experience selling hosting companies judging by your posting history....you appear to have done it a number of times?

  8. #8
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    Quote Originally Posted by djberriman View Post
    Seems to me you should have plenty of experience selling hosting companies judging by your posting history....you appear to have done it a number of times?
    Just the once with HTTPme in 2004.
    AussieHost.com Aussie Bob, host since 2001
    Host Multiple Domains on Fast Australian Servers!!

  9. #9
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    Quote Originally Posted by Shaw Networks View Post
    How the clients are currently being billed is another very important factor in the sale of a web hosting business. 500 customers on recurring subscriptions are far less likely to cancel service than 500 customers manually paying their bill every month.
    Yes true, but in the case of paypal subscriptions it has to be cancelled and recreated which is a pain.

  10. #10
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    it might be worth taking a broker on board - I can recommend a few, PM me for info
    Ditlev Bredahl. CEO,
    OnApp.com & SolusVM.com + Cloud.net & CDN.net

  11. #11
    If thats the case then you have nothing to worry about.

    I was purely pointing out as someone who may have been interested in buying your business that you appear to have sold similar businesses in the past.

    Anyone looking to buy your business would likely do similar research on here and google and come up with the same results.

    Any good business person does their research (and the internet makes it very easy).

    As you have a good explanation it won't be an issue. Like going for an interview its better to have an answer lined up ready for any difficult questions that might arise.

    You are more likely to get better offers if you are open and honest up front (I'm not saying you are not) otherwise many potential buyers may never contact you as they may be put off from what they find when they do their research.

    So I guess I am saying be 'open and honest' when setting out your proposal as that way you are more likely to get more interest and better offers for your business.

  12. #12
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    Quote Originally Posted by djberriman View Post
    Seems to me you should have plenty of experience selling hosting companies judging by your posting history....you appear to have done it a number of times?
    Quote Originally Posted by djberriman
    I was purely pointing out as someone who may have been interested in buying your business that you appear to have sold similar businesses in the past.
    This isn't the sales thread Mr CSI, so you are in no shoes to be "pointing out" for someone to warn them that I "appear to have sold similar businesses in the past". Yes I did attempt to sell this business in the past but you do not know if I did actually sell it or not, and for what reason I kept it.

    So actually your "research" or "investigation" results that I seemed to have sold so many similar hosting businesses in the past, are pure assumptions which is of no relation to this topic nor is it helpful in any way.

    Quote Originally Posted by djberriman
    Anyone looking to buy your business would likely do similar research on here and google and come up with the same results.

    Any good business person does their research (and the internet makes it very easy).
    As if I have anything to hide?

    I don't take your comments positive, but is perceived a rather very negative one, with no reason or evidence whatsoever. I don't appreciate it and I hope your posts get deleted.

  13. #13
    I apologise if they have caused any offence. It was not my intention.

  14. #14
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    Quote Originally Posted by eming View Post
    it might be worth taking a broker on board - I can recommend a few, PM me for info
    My revenue is nothing amazing, not sure if it's worth bringing a broker into this. My monthly rev in USD is only around 1.7k at the moment.. Cheers though

  15. #15
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    Might wanna get someone with an MBA or some sort of business experience on the field on board. Even a lawyer would help.
    TWC, LLC - USA based w/ three teams behind us!
    We will beat any web development or design quote

    http://totalwebcentral.com/

  16. #16
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    Quote Originally Posted by James Lee View Post
    My revenue is nothing amazing, not sure if it's worth bringing a broker into this. My monthly rev in USD is only around 1.7k at the moment.. Cheers though
    For a business that size, no, don't bring a broker in. Just post an ad in the WHT ad forum and someone will most likely snap up your business if the price is right. All things being equal, expect around 10 - 12mths revenue for your business - and that's for your domain/s, your site etc, and you signing a non-compete for 1yr min.
    AussieHost.com Aussie Bob, host since 2001
    Host Multiple Domains on Fast Australian Servers!!

  17. #17
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    Make sure you sign a legit legal doc of sale otherwise it wont be valid if brought to court. Dont leave anything a mystery because it will be brought up later down the road and could get you in trouble. Make sure you turn over all assets of the company to the new owner.

  18. #18
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    Quote Originally Posted by Aussie Bob View Post
    For a business that size, no, don't bring a broker in. Just post an ad in the WHT ad forum and someone will most likely snap up your business if the price is right. All things being equal, expect around 10 - 12mths revenue for your business - and that's for your domain/s, your site etc, and you signing a non-compete for 1yr min.
    Meh, don't go with this 10-12 month crap. Everyone and their brother will say the same thing on this board but you're selling yourself short.

    Evaluate your business and put a value that you feel is fair on it.

    Odds are, no matter what figure you come up you'll have some interested parties! Afterall, it is WHT, there's always someone willing to buy something here.

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