Selling My Hosting Business, How do I determine the value Options

[RTCruiser]

I have been hosting small business clients since 2001, but now it's time for me to move on. I am leasing one server here at the Planet that hosts approximately 35 paying clients (and about 40 pro-bono and freebie accounts).

My question is how do I go about determining how much my small hosting company is worth? I know most of my clients personally as I also designed most of the sites I host, so I want to make sure they get continued service.

Thanks for any suggestions.

- Robert

[skeeter1jd]

Webhosting businesses are hard to price and sell because 1) they are so volatile and fluid 2) customers may or may not like the fact that they been sold

I would also dump the freebie and pro-bono accounts. They only drag the business saleability down.

All businesses are sold on desirability, and / or assets and / or sales. This in turn is reflected in what is known as a multiplier. The more assets, sales or desirability the higher the multiplier. The greater the risk, the fewer customers or assets, or the lower the sales the lower the multiplier. Multipliers usually range from 1.5 to as high as 6. ThePlanet would rate about a 6..High desirability, large number of assets, and high cash flow

Lets now turn to your business and start out with an average of 3.

Sales "70 accounts but less than half are generationg revenue" (-1)
Assets "no tangible assets, high risk purchase" (-1)
Desirability "not actively being sought after" (.5)

So I would set the multiplier at .5

Average annual sales per site = $35 x 12 = 420
multiplier .5
420 x .5 = 210
Total sale price per site = $210
35 x 210 = $7350 for the entire server

Thats if you can find someone to actually give you that. I personally won't give folks that. There are others who just won't buy hosting businesses just because of the high risk involved. Even I would only give you 10% of the net sales from those accounts every month for an entire year (like a franchise fee). This would cut my risk down, and also ensure that customers don't jump ship as soon as the sale is made. You can always chat with me about this online, or PM if you have any further questions.

[RTCruiser]

Thanks, Joseph. I appreciate the info.

- Robert