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  1. #1

    How much to ask for this hosting business?

    About 1700 customers and counting ( about 100-120 new accounts per month)
    about 80k in receipts and counting(yearly)

    smalls packages range from 100mb to 2gb
    2 servers dell poweredge leased

    expenses are aprox 1,100k every month
    what else? we sell domains from resellerclub

    Any ideas?

    This is a spanish speaking hosting services.

    Any help will be appreciated.

  2. #2
    Join Date
    Feb 2008
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    Are the figures in CL pesos or US dollars?

    Regards
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  3. #3
    I already converted those to USD, all expenses are in USD.

  4. #4
    Join Date
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    Normally you ask for 8-12 months profit for a business.

  5. #5
    8-12 month of profit in a increasing business?
    so far 120 new paid accounts this month.
    Also, renewals are about 95%, our uptime is awesome.
    all accounts are annually paid, except about 50 semiannually.

  6. #6
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    Feb 2002
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    Quote Originally Posted by antoniojeldres View Post
    all accounts are annually paid, except about 50 semiannually.
    Annual accounts are considered a liability. The new buyer has to continue hosting those customers for free until their term renews, and then they may not renew at all.
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  7. #7
    Yes, you are right, whoever, this is 2 year old business, pretty much all revenue comes from 1 year old accounts, this means, that eventually 95% of those 1.500 accounts are doing the renewal process right now, plus the 120-150 new accounts monthly, I wanted to point this out, because this is not a light business, is a growing business.

    The only reason I'm asking about this, is because we may ended selling this business, all because some partnership issues .

  8. #8
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    Quote Originally Posted by antoniojeldres View Post
    Yes, you are right, whoever, this is 2 year old business, pretty much all revenue comes from 1 year old accounts, this means, that eventually 95% of those 1.500 accounts are doing the renewal process right now, plus the 120-150 new accounts monthly, I wanted to point this out, because this is not a light business, is a growing business.

    The only reason I'm asking about this, is because we may ended selling this business, all because some partnership issues .

    Unless those people who pay annually are in a multi year contract they are worth pretty much ziltch.
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  9. #9
    If someone is buying a business they will want to know what last year profit was. They won't offer a price based on potential new customers that they haven't got yet. The may take it into consideration, but what was last years profit?

  10. #10
    Quote Originally Posted by FS - Mike View Post
    Normally you ask for 8-12 months profit for a business.
    I agree. But it will be hard due to spanish speaking clients.

  11. #11
    Join Date
    Jul 2002
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    You might also want to check out the current issue of WHIR... This topic was the cover story. http://whirmagazine.texterity.com/wh.../200907/?pg=26

    But as hostbite pointed out, the spanish speaking clients may subtract from the value, purely from the standpoint that many hosting companies may not be setup to handle the language differences. Those would have to some work this out possibly by adding staff.

    If this is a growing business, and if this is growing as fast as you say, and as you are already setup to support spanish speaking clients, seems like one partner would want to buy the other out. I suspect that may yield the highest value to you - either in the business, or in cash from the other partner.

    BTW, the fact that it is a growing business adds some but not as much as you seem to be thinking. Valuation is based on a point in time (the time of sale), and not down the road... The fact that it is growing today does not mean it will tomorrow. It could suffer some catastrophic event. The fact is that it's the future, you and any potential buyer does not know what will happen.
    Last edited by Lagniappe-labgeek; 08-25-2009 at 04:25 PM.
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  12. #12
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    Quote Originally Posted by hostbite View Post
    I agree. But it will be hard due to spanish speaking clients.
    But surely they would know the profits from the last 8-12 months.

  13. #13
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    The argument that annual accounts are a liability or not worth anything are pretty silly. Annual accounts are worth the same as monthly accounts as they renew month. So a host that only sells yearly plans but does $500,000 a year is worth nothing? Or is not worth at least $500,000? Believe someone selling that would have no problems in selling.

    Also remember your clients are not the only thing you are buying when acquiring a host. In many cases you are buying a brand, buying their growth, buying their reputation. I was offered 24 months revenue for HostNexus and I laughed the guy in the face.
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  14. #14
    It really depends on the company.

    If it is a smaller company that has only been in business for a year or two, then yearly/annual accounts will not be worth as much... when compared to a company that has been around for ten years and has a very long history of yearly renewal rates.

    The fact is that purchasing yearly/annual hosting customers is a liability and a risk. The purchaser must continue to host those customers for free, and the risk is that the customer will not renew.

    However, if the company being purchased has 10 years of history and can show a 95% annual renewal rate... then those annual customers are worth a lot more then a company with much less history or inability to show annual renewal rates.
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  15. #15
    Join Date
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    I really do not think you're going to get what your looking for or what you think is fair. If you do not wish to run it anymore maybe hiring someone else to handle the day to day be best.

    The WHIR talks about a lot of the things I was going to bring up. A lot of the sales on WHT are sole proprietorships. They are selling web site and customers and maybe the servers if they own them. That is the majority of sales on WHT. So a lot of the advice you get reflects this where nothing else is factored in. The fact the company has great cash flow, actual documents of growth and such do not really seem to matter in these parts.

    We've listened to inquiries from time to time like any good company. Without revealing much of anything these people looking to purchase say we will 12 months revenue and that's all. They do not care about anything else. They do not care if there is low turnover or if the company is projected to grow 3 times in size in a year from now. Or assets the company has or any other documentation that would suggest it's worth more than what they want to offer to any hosting company.

    It is really not a sellers market and unless your company is going under or you need the money it's really not worth it.
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  16. #16
    just to add my 2cent ...im not a pro at this but i was always told 8-12 months.

  17. #17
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    Jul 2009
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    Quote Originally Posted by TonyB View Post
    It is really not a sellers market and unless your company is going under or you need the money it's really not worth it.
    If you just lost your mind and the business is going further,it is ok.Or,it is not worthy to quit.
    Last edited by eric_pu; 09-09-2009 at 06:00 PM.
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  18. #18
    Join Date
    Aug 2002
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    How much are you charging and how much are you dumping per server? From the looks of it, you are growing only in terms of clients (say 4 to 5 new people per day) but not in terms of infrastructure. Its like you are trying to save as much (earn as much as possible, pocket it) and then sell it. Not my cup of tea but good luck.

  19. #19
    Join Date
    Jun 2003
    Posts
    367
    I've looked at a lot of hosts and from my perspective the largest problem your going to have is the language barrier. I'd suggest you try and find somewhere to sell your site where there is a significant amount of people who speak Spanish.

    Your making a fair amount of money and your costs are fairly low.

    What control panel and billing system are you using?
    Common sense is not so common.

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