2011 08-15 hosting m&a market overview - updt

Hosting M&A Market Overview
Frank Stiff, President
Cheval Capital, Inc.
August 8th, 2011
Updated

Buyers tend to be existing players looking for simplicity and revenue
Quality gets a premium
Migration deals get priced on buyer cash flow after migration
Shared Avg: 0.8-1.2x, higher on quality of ops, growth & size
Dedicated Avg: 0.7-0.8x, harder to migrate, lower ROI
Non-migration get priced on existing cash flow and can have a large range (2-10x EBITDA)
Cheval M&A Market Overview

Lots of buyers for shared and VPS in all sizes
Solid demand for medium to large dedicated customer bases at good ARPU. Smaller bases and lower ARPU’s can be difficult.
Strong demand for medium to larger data centers but smaller facilities can be difficult
Pockets of demand for domain and registrars
Buyers driven by cost & difficulty of organic growth
M&A Market - Buyers

Seller pool has increased from recent lows but still fewer sellers than buyers
Prices aren’t high enough to drive owners to sell
Strong buyer to seller ratio has helped keep prices up
Exceptions: adult hosters, low ARPU hosters and hosters with higher churn rates. All appear to have more sellers than buyers
M&A Market - Sellers

2011 08-15 hosting m&a market overview - updt

by Cheval Capital, Inc on Aug 16, 2011

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