Dec 8, 2008 - Web Host Boot Camp Slides (Final)

Common “Transaction Success” Issues when Selling or Buying a Hosting Company Frank Stiff & Hillary Stiff C HEVAL C APITAL, I NC. [email_address] [email_address] www.chevalcap.com

Disclaimer
This presentation is for discussion purposes and is not financial advice or a comprehensive discussion of the issues involved.
THE PURCHASE OF ASSETS OR BUSINESSES IS RISKY. SMALL BUSINESSES ARE OFTEN DEVELOPMENT STAGE OPPORTUNITIES WITH SIGNIFICANT FINANCIAL, TECHNOLOGICAL AND OPERATING HURDLES TO OVERCOME. PURCHASERS HAVE A MEANINGFUL RISK OF LOSS OF THEIR ENTIRE PURCHASE PRICE.
Please be sure to consult your financial and legal advisors when valuing a company, considering the sale or purchase of a business or making other financial decisions.

Agenda
Who we are
What is “transaction success” when buying or selling
Buyer “transaction success” issues
Seller “transaction success” issues
Where a broker/banker helps
Q&A

Background – Cheval Capital
Who we are
Investment bankers active in hosting/ISPs since 1996
Completed over 150 Hosting/ISP acquisitions including transactions such as the Endurance/iPower merger
Member of FINRA (formerly NASD) and SIPC
What we do
Represent buyers & sellers of internet, telecom and related companies
Distribute a weekly listing of sellers, creating a deal marketplace for small and mid sized companies
Who we have worked for
Endurance Int’l Group, Rackspace, Hostopia, Midphase, Jumpline, Verio, etc. plus many other smaller companies.

What is “transaction success”
For Sellers: Getting paid what and when you expect to be paid
For Buyers: Buying what you think you are buying.
Understand the pros/cons/risks
A timely process
Any surprises are minor
A “successful” transaction for the other party

Buyer “transaction success” issues
Experience, Discipline and Commitment
Understanding what you are buying
Profitability & Cash Flow
Recurrence
Type
Accuracy
Customer existence & quality
Employees
Hidden liabilities

Buyer “transaction success” issues (cont.)
Migration & operation of the business
Getting what you need to run the business
Domain names, brands, servers, routers, website, software licenses, people, etc
Good purchase agreement
Planning
“Transaction success” for the other side

Seller “transaction success” issues
Focus, Organization, Commitment
Who you are selling to
Do they have the money
Have they made acquisitions before
Do they have good references
What is the likelihood that they will close
Can they migrate/run the business
How big are they.
“ Dumb money” vs “Smart money”
Distraction from your business

Seller “transaction success” issues (cont.)
What you are selling
Good purchase agreement
“Transaction success” for the other side

Where a broker/banker can help
Established practices for buying/selling
Market prices & standard terms
A source of prospective buyers or sellers
Experienced negotiator
Ideas on how to solve problems and bridge valuation gaps

Summary
Successful sellers/buyers focus upfront on the details
Gain experience or hire it (or both)
It is in your interest for the other side to have “transaction success”

Questions? [email_address] [email_address] www.chevalcap.com

Disclaimer
This presentation is for discussion purposes and is not financial advice or a comprehensive discussion of the issues involved.
THE PURCHASE OF ASSETS OR BUSINESSES IS RISKY. SMALL BUSINESSES ARE OFTEN DEVELOPMENT STAGE OPPORTUNITIES WITH SIGNIFICANT FINANCIAL, TECHNOLOGICAL AND OPERATING HURDLES TO OVERCOME. PURCHASERS HAVE A MEANINGFUL RISK OF LOSS OF THEIR ENTIRE PURCHASE PRICE.
Please be sure to consult your financial and legal advisors when valuing a company, considering the sale or purchase of a business or making other financial decisions.

Common “Transaction Success” Issues when Selling or Buying a Hosting Company Frank Stiff & Hillary Stiff C HEVAL C APITAL, I NC. [email_address] [email_address] www.chevalcap.com

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Dec 8, 2008 - Web Host Boot Camp Slides (Final)

by Cheval Capital, Inc on Dec 10, 2009

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Dec 8, 2008 - Web Host Boot Camp Slides (Final) — Presentation Transcript