Hosting M&A Market Overview

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HostingCon 2011 - Overview of M&A activity in the web hosting space. Hillary Stiff & Frank Stiff of Cheval Capital, Inc.

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Hosting M&A Market Overview

  1. 1. Hosting M&A Market Overview Hillary Stiff, Managing Director Cheval Capital, Inc. August 8th, 2011 Updated
  2. 2. Cheval M&A Market Overview• 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)
  3. 3. M&A Market - Buyers• 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
  4. 4. M&A Market - Sellers• 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

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