How to sell a web hosting business

If you're selling your web hosting business, these are some steps to follow.

Contents 1 Prepare your business for a sale 2 Prepare your sales offer 3 Decide on an asking price 4 Advertise your business 5 Make the sale 6 Help during the transition period

Prepare your business for a sale

• Compile all business information and assets: agreements with vendors, domains associated with the business, servers, licenses, etc.
• Collect payments due from non-paying clients or suspend their accounts if they don't pay.
• Update your accounting records.
• Check that all website content is current and accurate. Consider updating the design if it looks dated.

Prepare your sales offer

• Compile a breakdown of your clients and services.
• Document purchase dates and warrantees for equipment, locations of everything, passwords, special instructions, and other details that a new owner will need to know.
• List the main information that potential buyers will want to know:
  • Client numbers and revenues
  • Control panel used
  • Server and other expenses

• Highlight key selling points, for example:
  • Billing and payment frequencies (recurring subscriptions and annual payments are pluses)
  • How long your company has been in business (if it's more than a couple of years)
  • A niche that you serve
  • The reputation of your company, if it's positive
  • How many clients have come to you by referrals
  • How long your clients have been with you
  • Traffic numbers and conversion rates for your website / rate of company growth

Decide on an asking price

A starting point is between eight and 12 months of revenue for the company and its assets. However, the value of a web hosting company depends on a number of factors, such as client payment frequencies and the key selling points listed above. Browse ads for other web hosting companies for sale and compare their asking prices with the company's perceived value.

Advertise your business

Advertise only where you don't need to name the company in the advertisement, and have potential buyers sign an NDA before providing them with the company name. The sale of a web hosting company typically makes clients nervous because they don't know what to expect. If they know about an upcoming sale, they may switch to a different host without waiting to see how the company is run under new ownership. For this reason, your company could lose value during the sales process if your clients know about the sale before it takes place.

In your advertisement, describe your ideal buyer.

Possible places to advertise your web hosting company sale:

• The Web Hosting Talk Other Hosting-Related Offers forum
• Other forums about or related to the web hosting industry
• Web hosting directories that have an advertising section
• BizBuySell

Make the sale

Evaluate potential buyers. The highest bidder isn't necessarily the best choice for your company. Look for someone with a similar approach so that your clients are more likely to stay with the new owner.

Hiring a lawyer or accountant is advised to help with larger company sales in particular.

Help during the transition period

Many buyers of web hosting companies will want the previous owner to stay on board for the first few months. You can show the new owner how you've run the business and handled problems, and your clients will feel less nervous knowing that you're there to help.

Buyers of web hosting companies also often ask the previous owner to sign a non-compete agreement for a period of about a year. Terms of the agreement can vary but typically prevent the previous owner from offering their services to the company clients.

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