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Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
Web Hosting M&A - Strategy and Motivation
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Web Hosting M&A - Strategy and Motivation

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A look at, valuations and transaction motivations, strategy comparing two similar but very different firms. These slides are from HostingCon 2009 - Washington DC - Presented by Tom Millitzer President …

A look at, valuations and transaction motivations, strategy comparing two similar but very different firms. These slides are from HostingCon 2009 - Washington DC - Presented by Tom Millitzer President of Millitzer Capital

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Transcript

  • 1. Tom Millitzer 1
  • 2. Tom Millitzer – President of NCC Founded 1994 and Served the Internet Market since 1997 Completed Almost 300 Assignments Represent Sellers Success Based Company 239-288-5550 tomm@com-broker.com
  • 3. 3
  • 4. DISSECTING TWO POTENTIAL ACQUISITIONS: •Determine Motivation of the Seller •Detect potential buyer pitfalls. •Uncover hidden value, including what did the seller miss. •Potential buyer negotiation strategy. •You will have to ask questions, make decisions and be intuitive Lets make a deal. Before we go any further one housekeeping note...
  • 5. What We Are Going To Dissect •Two companies. •There are several items that are consistent between them, what are they? •Determine Motivation of the Seller - Or do they know it should be modified. •Do we have any preconceived deal points that are erroneous? •Limited information herein, I think is is important it is probably here. But if you want to ask a leading “zinger” question I will answer, or I may not. •One question of paramount importance is “What are the alternatives”. Lets make a deal.
  • 6. B&B World Hosting Llc Kansas City, MO Established 1999... Purchased by Chet Anderson 2005 Dedicated and Virtual Hosting 2007 Revenues - $6.5 million 2008 Revenues - $9.0 million 2009 Est - $10.5 million 6
  • 7. Motivation to Sell: Concern future value. 7
  • 8. 8
  • 9. Avg Mo Annualized Accounts Rate Rev Revenues Shared Hosting 1,200 $18 21,600 $259,200 Virtual Dedicated 1,200 $110 132,000 1,584,000 Dedicated 2,200 $285 627,000 7,524,000 Colocation 200 $850 170,000 2,040,000 Total Revenue 4,800 $198 950,600 $11,407,200 2007 6,500,000 2008 9,000,000 2009 Projected o 10,500,000 Annualized Running R 11,407,200 z 9
  • 10. B&B World Hosting Trailing 12 Month Ending June 30, 2008 e Summary for HostingCon Revenues 10,000,000 Cost of Goods Sold 2,800,000 Salary Owner/Wife 400,000 Wages Employees (22) 1,100,000 Other Expenses 4,250,000 Depreciation 525,000 Interest 360,000 Vehicle Expense 22,000 Travel and Entertainment 140,000 Total COGS and Expenses 9,597,000 403,000 4.0% 10
  • 11. Green-For-Less Hosting -Founded 2001 - S Corp -Revenues: $7m 2007, $11m 2008, est. $14m in 2009 -Company expect to grow to $20 m by 2011 -2008 Net Income $147,000. -Founded Adjusted EBITDA = 28% of Revenues -Founded Salary $80,000 -Almost All Company growth comes from Organic Sources. 11
  • 12. Green-For-Less Hosting -Almost total virtual shared hosting. -Eighty employees - 60 are home based in 8 Countries -Company supports 12 languages, expanding to 20. -Corp Office - Admin/Billing/Net/Giving -Marc the owner has spent 50% time “marketing” His slogan is: 12
  • 13. 13
  • 14. 14
  • 15. B&B World Hosting Got Back With Some Due-Diligence 15
  • 16. Green-For-Less Due-Diligence Update 16
  • 17. Avg Mo Annualized Contribution HOSTING PACKAGES Accounts Rate Rev Revenues Portion Green Starter 5,000 $14.00 70,000 $840,000 Green Enterprise 500 $60.00 30,000 360,000 Green Starter Annual 30,000 $17.00 510,000 6,120,000 1,530,000 Green Enterprise Annua 8,000 $55.00 610,000 7,320,000 1,830,000 43,500 $28.05 1,220,000 $14,640,000 3,360,000 23% 17
  • 18. Green-for-Less Hosting Trailing 12 Month Ending June 30, 2008 Summary for HostingCon Revenues 12,500,000 Cost of Goods Sold 2,750,000 Salary Owner 80,000 Wages Employees (80 Worldwide) 2400000 Other Expenses 3,750,000 Contributions From Annual Accoun 2,875,000 Green-For-Less Contributions 60,000 Green-for-Less Contribution Admi 287,500 Travel and Entertainment 120,000 Total COGS and Expenses 12,322,500 177,500 1.4% 18
  • 19. B&B World Hosting: Due-Diligence Field Report 19
  • 20. 20
  • 21. B&B Has a Top Notch Facility 21
  • 22. 22
  • 23. 23
  • 24. Green-For-Less Hosting • Actually has $175,000 on CC • 85% Accounts pay annually • Has cash of $1.3 million • No advertising expense on Op Statement but spends about $300k year on questionable ads in various vegan and organic magazines.
  • 25. We have many questions... 25
  • 26. Where do we go from here? Tom Millitzer tomm@com-broker.com 239-282-5550 26
  • 27. Please Complete Survey! Tom Millitzer NCC International, Ltd Session Track: Business Development Session Title: Dissecting a Hosting Company Acquisition tomm@com-broker.com

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