Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Advertise on LowEndTalk.com
What do you keep in mind when acquiring hosting companies?
New on LowEndTalk? Please read our 'Community Rules' by clicking on it in the right menu!

What do you keep in mind when acquiring hosting companies?

A lot of providers here probably acquired hosting companies here. What do you keep in mind when acquiring such business? Like customer retention, business size, etc. How do you determine the price of such companies? Also if the provider is trying to do fraud business with you like few imaginary clients with made up invoices, orders, etc. How do you determine that? Thinking about acquiring some hosting business of small sizes.

When you're afraid, close your eyes and count to five. Sometimes it works for me.

Comments

  • DataIdeas-JoshDataIdeas-Josh Member, Provider

    I keep in mind is it the @Boogeyman ???

    Alien Data: VPS and Colo Based In Texas, Unmetered Bandwidth.
    RPIServers: Dedicated Micro Servers. Unmeterd Bandwidth

  • DataIdeas-JoshDataIdeas-Josh Member, Provider

    Look up their reviews, look at their customer service? prices for product.
    Do they want to be sold.
    The bigger question is how much is their business worth to you?

    Alien Data: VPS and Colo Based In Texas, Unmetered Bandwidth.
    RPIServers: Dedicated Micro Servers. Unmeterd Bandwidth

  • @DataIdeas-Josh said: I keep in mind is it the @Boogeyman ???

    “For fifteen years, everybody told me I was making it up. Everyone said it was just a story. There's no such thing as the Boogeyman. But I was right.”

    @DataIdeas-Josh said: Look up their reviews, look at their customer service? prices for product.

    Do they want to be sold.
    The bigger question is how much is their business worth to you?

    And what about made up customers thing? Acquiring business take time to find out these things? eh?

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • DataIdeas-JoshDataIdeas-Josh Member, Provider

    At some point I would think information will have to be disclosed.

    Alien Data: VPS and Colo Based In Texas, Unmetered Bandwidth.
    RPIServers: Dedicated Micro Servers. Unmeterd Bandwidth

  • SmartHostSmartHost Member, Provider

    Ease of integration...do their operations easily integrate into your existing operations (assuming combining operations...). Software, offerings, support methods, locations, etc...
    .
    .

    SmartHost™ - Intelligent Hosting! - Multiple Locations - US/EU! - Join our Resale Program
    https://www.smarthost.net - sales@smarthost.net - Ultra-Fast NVME SSD KVM VPS - $2.95/month!

  • Another thing I forgot. How do you match their package with your current packages? Like they provide different specs, prices, etc.

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • DataIdeas-JoshDataIdeas-Josh Member, Provider

    Well look at what they offer. Is it the same as you?
    What about their software.
    Are they using WHMCS or something else?
    Are they using cPanel or something else?
    If their packages are different. How much different is it?

    Thanked by 1Boogeyman

    Alien Data: VPS and Colo Based In Texas, Unmetered Bandwidth.
    RPIServers: Dedicated Micro Servers. Unmeterd Bandwidth

  • BoogeymanBoogeyman Member
    edited November 18

    @DataIdeas-Josh said: Are they using WHMCS or something else? Are they using cPanel or something else?

    I would not be concerned about WHMCS/any billing software they have. I can integrate it in little to minimum time with my current solutions. My concern is hosting control panel they are using. People are more familiar with cPanel. And I am currently developing my own. I don't know if they are going to love it or not.

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • DataIdeas-JoshDataIdeas-Josh Member, Provider

    Rather if you have your own or not. How easily can you migrate their accounts from cPanel into yours? That would be a big question to ask yourself.

    Alien Data: VPS and Colo Based In Texas, Unmetered Bandwidth.
    RPIServers: Dedicated Micro Servers. Unmeterd Bandwidth

  • jbilohjbiloh Administrator

    Revenue and growth or shrink rate.

    Jon Biloh
  • Do hot sisters work for the company? Will they stay on once the business is sold?

    Thanked by 1dahartigan

    Personal consultant to OP's Mom™

  • @DataIdeas-Josh said: Rather if you have your own or not. How easily can you migrate their accounts from cPanel into yours? That would be a big question to ask yourself.

    That would not be big thing anyways. I can easily migrate the contents. But cPanel have tons of feature that needs to be implemented to match them.

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • BradyHBradyH Member, Provider

    A few things you want to look at.

    1. do they own or lease the servers
    2. What Locations do they offer
    3. How many clients pay monthly, quarterly and yearly. If most of the clients are yearly then the value is less for the company than monthly paying clients.
    4. How old is the business
    5. Life time value of the client
    6. Monthly income vs monthly expense.
    7. Then you can look at the total income for the past 12 months vs expense and get your net profit. Then You would use a multiply like 1.7 times net profit or 3.4 times. You put the multiply that you fee is right there is no write or wrong answer on it.
    Thanked by 1Boogeyman

    DediPath - Pure SSD VPS | Windows VPS | Dedicated Servers | Colocation
    Los Angeles | New Jersey | Asia Optimized Network | DDoS Protection

  • WSCallumWSCallum Member, Provider

    @BradyH said:
    A few things you want to look at.

    1. do they own or lease the servers
    2. What Locations do they offer
    3. How many clients pay monthly, quarterly and yearly. If most of the clients are yearly then the value is less for the company than monthly paying clients.
    4. How old is the business
    5. Life time value of the client
    6. Monthly income vs monthly expense.
    7. Then you can look at the total income for the past 12 months vs expense and get your net profit. Then You would use a multiply like 1.7 times net profit or 3.4 times. You put the multiply that you fee is right there is no write or wrong answer on it.

    I think what OP is getting at is how you’d get to your last point, how exactly do you determine what you think is ‘the right fee’

    Clouveo - SSD Cloud Servers & Hosting
    AMD EPYC Powered | DDoS Protected | Snapshots | Auto Backups

  • @WSCallum said:

    @BradyH said:
    A few things you want to look at.

    1. do they own or lease the servers
    2. What Locations do they offer
    3. How many clients pay monthly, quarterly and yearly. If most of the clients are yearly then the value is less for the company than monthly paying clients.
    4. How old is the business
    5. Life time value of the client
    6. Monthly income vs monthly expense.
    7. Then you can look at the total income for the past 12 months vs expense and get your net profit. Then You would use a multiply like 1.7 times net profit or 3.4 times. You put the multiply that you fee is right there is no write or wrong answer on it.

    I think what OP is getting at is how you’d get to your last point, how exactly do you determine what you think is ‘the right fee’

    Well I personally think there isn't a one size fits all answer to this to begin with.

    hm. I've lost a machine.. literally lost. it responds to ping, it works completely, I just can't figure out where in my apartment it is.

  • BradyHBradyH Member, Provider

    There is no right answer. As each of us could take the data above and give it a different valuation. The deal is you make and offer based on the numbers above and how long your willing to recoup that investment.

    DediPath - Pure SSD VPS | Windows VPS | Dedicated Servers | Colocation
    Los Angeles | New Jersey | Asia Optimized Network | DDoS Protection

  • seriesnseriesn Member, Top Provider

    How much would my brand be worth to you? The answer depends on bunch of stuffs.

    • Does my brand actually have a value minus the product?
    • Will you continue to operate the brand as it's own and continue to offer similar product at similar price point and maintain same level of brand image?
    • By doing that, would that increase your profitability?

    If all of those above answers yes, 8-18 month ROI.

    If any one of them is no, don't bother, unless you are buying big company. Because you ain't getting much PR attention and most of the clients will leave, resulting in very few "growth" opportunities.

    When we were aggressively acquiring small brands, we realized that most of their user base are already our family members and those investments really didn't yield much value.

  • BoogeymanBoogeyman Member
    edited November 19

    @BradyH said: A few things you want to look at.

    do they own or lease the servers What Locations do they offer How many clients pay monthly, quarterly and yearly. If most of the clients are yearly then the value is less for the company than monthly paying clients. How old is the business Life time value of the client Monthly income vs monthly expense. Then you can look at the total income for the past 12 months vs expense and get your net profit. Then You would use a multiply like 1.7 times net profit or 3.4 times. You put the multiply that you fee is right there is no write or wrong answer on it.

    Will keep in mind. Thank you very much.

    @seriesn said: If any one of them is no, don't bother, unless you are buying big company. Because you ain't getting much PR attention and most of the clients will leave, resulting in very few "growth" opportunities.

    When we were aggressively acquiring small brands, we realized that most of their user base are already our family members and those investments really didn't yield much value.

    So basically acquiring small company doesn't create any value/little to no value at all?

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • seriesnseriesn Member, Top Provider

    @Boogeyman said:

    @BradyH said: A few things you want to look at.

    do they own or lease the servers What Locations do they offer How many clients pay monthly, quarterly and yearly. If most of the clients are yearly then the value is less for the company than monthly paying clients. How old is the business Life time value of the client Monthly income vs monthly expense. Then you can look at the total income for the past 12 months vs expense and get your net profit. Then You would use a multiply like 1.7 times net profit or 3.4 times. You put the multiply that you fee is right there is no write or wrong answer on it.

    Will keep in mind. Thank you very much.

    @seriesn said: If any one of them is no, don't bother, unless you are buying big company. Because you ain't getting much PR attention and most of the clients will leave, resulting in very few "growth" opportunities.

    When we were aggressively acquiring small brands, we realized that most of their user base are already our family members and those investments really didn't yield much value.

    So basically acquiring small company doesn't create any value/little to no value at all?

    I spoke about 3 points above. Those 3 points in my opinion creates value. A company might be small, but still be tremendously profitable and a quality brand.

    You can acquire a small company and continue growing the brand, without the initial effort, that original founder put in to make the brand.

    Thanked by 1dominame
  • @seriesn said: Will you continue to operate the brand as it's own and continue to offer similar product at similar price point and maintain same level of brand image?

    If you acquire such business what'd you do in your case? Will you move customers under your roof or keep them where they are right now and nurture it to grow further?

    @seriesn said: You can acquire a small company and continue growing the brand, without the initial effort, that original founder put in to make the brand.

    Makes sense.

    @WSCallum said: I think what OP is getting at is how you’d get to your last point, how exactly do you determine what you think is ‘the right fee’

    Haha true.

    When you're afraid, close your eyes and count to five. Sometimes it works for me.

  • seriesnseriesn Member, Top Provider

    @Boogeyman said: If you acquire such business what'd you do in your case? Will you move customers under your roof or keep them where they are right now and nurture it to grow further?

    If my target is to buy the brand, I am keeping the brand separated and act more of like an consultant and let it continue at its own pace.

    If my target is to simply acquire the client base, they are getting merged.

    Thanked by 2dominame Boogeyman
Sign In or Register to comment.