Selling web hosting business. What's it worth? Where do I sell it?
Question: I have a small but successful web hosting busines ( about 30 clients generating 00 gross per month ) and was wondering how to value it and sell it. I could put it on Ebay I guess, but what’s it worth? Are there better / quicker ways to sell it?
http://hosting.dugancom.com
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Hi,
First, I have sold two businesses on ebay several years back, and I assure you it is the WRONG place to sell a business today. The reason is that so many people throw up a site, and sell it as a "business". They talk about potential revenue, and make outrageous claims.
About a year ago, I had some extra money I wanted to invest in an online business and I checked out ebay. Unfortunately, it was bombarded with these scams, and I had a very difficult time finding any legitimate seller. I very quickly eliminated the real from the scammers by explaining that I was an experienced business owner and asking to review the financial records of the company and see logs of traffic or a client list. Some responded that their company was not for me, others simply never got back to me.
Unfortunately all the fraudsters on ebay will demolish the true value of your company. I seriously doubt it selling for more than $50 since so many other people just get a reseller then claim to sell a "hosting business".
I said all that to explain why ebay is the wrong place to sell your business. The better place would be to contact an existing web hosting company and offer to sell your 30 clients. They know their margins and their infrastructure and willing to pay a much higher price. You also don’t need to worry about producing income statements or balance sheets as if you were selling a business. Lastly, you are really freeing youself from the risk unneccessary litigation in case some one purchases your business, and claims that you provided false information.
To answer your other questions the top dollar for your company should be 3 time current annual profits. Revenue looks nice, but it is cashflow that increases equity (hence making money for the owner).
Hope this helps,
Leo
ebay
From my experience, the web hosting business is cut-throat. What I might do is contact some of the other hosting services out there and consider selling directly to them. They will probably pay more because they understand the value of revolving accounts and the revenue stream.
To value this business, you need to figure out what it nets, not what it grosses, preferably on cash, rather than accruals, basis. Then you need to figure out a proper cash flow multiple, which will depend on growth in cash flows and fluctuations in cash flows.
Contact me via Yahoo! Answers with you e-mail address; I’ll help you figure it out.