Acquisitions 2 From start to end, how long does an acquisition take?
This can really vary depending on the complexity of the purchase and the responsiveness of the buyer, seller and their respective attorneys.
For small company transactions, we’ve seen transactions started, closed and migrated within one month.
For larger companies, we suggest planning for a 3-4 month process; one month to get to an LOI with a prospective buyer, another month for the due diligence and legal documentation process and one to two months for the migration process. Please keep in mind that every company is different and these estimates could vary wildly from what you might experience. (For a precise estimate of how long you should plan for, give us a call and we’d be happy to walk through it based on your company.)
Are there any specific services or ways hosting companies can alter their services or technical offerings to increase the overall valuation?
This is a difficult question to answer as what might be critical to raising value for one company may not be necessary for another. The three most likely areas would be:
1. Migrating from a custom or outdated control panel to cPanel or another modern platform.
2. Separating the billing/accounting/technical infrastructure of different products so that they could be sold separately (for companies with very different products.)
3. Updating other software or infrastructure that might deter a buyer or make migration more difficult.
Why would a hosting provider use you to sell or buy versus doing it on their own?
Our job is to help our client complete a transaction at the best possible combination of price and risk (as determined by our client.) Overall, we believe that our clients end up benefitting far more than what our fee costs them. Some of our value added includes:
1. We can bring a large number of buyers or sellers to the table at the same time (and can help the buyer/seller assess the strengths/weaknesses of each.)
2. We know how to market a hosting company to buyers and what types of information/data buyers need to bid aggressively.
3. We have extensive skills/experience in negotiating and completing hosting transactions (over 200 hosting/ISP/& related).
4. We have extensive knowledge of the valuations/terms in the
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Hillary Stiff Cheval Capital, INc.
hosting transaction market (which helps our clients understand whether an offer is over or underpriced or whether the offered terms are appropriate or inappropriate.)
5. We understand the various ways transactions can be structured to manage risk, improve price, change returns, etc. (and can advise buyers/sellers on the issues that really matter and that they should focus on.)
6. Our fee is 100% success based, we only get paid when a transaction is complete.
With the recent technologies and marketing propaganda being focused on cloud computing, have you seen a decrease or increase in the number of shared hosting acquisitions taking place?
Our general sense is that the shared acquisition market has been improving. I believe this is in part due to a general improvement of economic conditions and more interest in hosting due to Cloud and other factors.
The acquisition process for a small business owner seems scary, what advice can you provide to someone considering this?
I’d encourage business owners not to start the sale process until they understood and were comfortable with it. We’re happy to talk and walk you through what we do and how it works. It doesn’t cost anything and we generally don’t bite.
Are there any particular area(s) where problems arise in transactions that sellers should be aware of?
If there is a common area where transactions go wrong, I’d have to say it occurs when the buyer ends up with something different than they were expecting. I know that sounds kind of obvious, but it does happen.
We believe it is in both parties’ interests for a transaction to go well. If bad things start to happen for one side, then the risks to the other side increase.
For a seller, this means that ensuring your buyer has a good look/feel for you company is important. It may also makes sense to give weight in your decision-making process to experienced buyers that have done a lot of diligence and/or to buyers whose existing business is the same or very similar to yours.
For buyers, this means making the effort to ensure the revenues/customers you think you are buying are really there. It also means making sure you have the capability of migrating and supporting the customers.
If as a buyer or seller you are not willing or able to put in the work, we’d suggest holding off on a transaction.
P! For more information visit
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