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Tom Millitzer, President - NCC
Tom Millitzer – President
NCC International
Cloud
Telecom
Valuations
MatriXIn A New
Tom Millitzer, President - NCC
Tom Millitzer – President
NCC International
 Internet M&A Firm Founded 1994
 Over 300 Com...
Tom Millitzer, President - NCC
Tom Millitzer – President
NCC International
I want to do business
with you....
tm@com-broke...
Tom Millitzer, President - NCC
What we will do today…
 Valuation Theory in the 4th
and 6th
Dimension
 Deals
 Cloud Valu...
Tom Millitzer, President - NCC
The provider…End user. . .
Tom Millitzer, President - NCC
Rule of 4 – Valuation Theory
 Multiple of EBITDA
 Multiple of Revenues
Tom Millitzer, President - NCC
…. Operating in the 4th
Dimension
Classic “Shared Hosting” 1X Annual Revenues
.25 X 4 = 1
T...
Operating in SYNERGY Dimension
• SYNERGY………
Tom Millitzer, President - NCC
… WE Reduce Costs
… WE Build On Our Efficiencies
… WE Leverage Assets
Tom Millitzer, President - NCC
…. WE Operate in the 6th
Dimension
6 x EBITDA = 4 x Post Synergy
• Synergy should move most...
Tom Millitzer, President - NCC
…. Operating in the 6th
Dimension
Tex
t
4 X 6 X
Tom Millitzer, President - NCC
…base 4 to 6 X EBITDA Valuation Range
4-6 EBITDA is often the “comfort” or “negotiating sta...
Tom Millitzer, President - NCC
…base 4 to 6 X EBITDA Valuation Range
is the floor for Cloud services
Tom Millitzer, President - NCC
…ENOUGH …
We want to look at some real
deals…
Tom Millitzer, President - NCC
… March 2010 TDS acquires
Tom Millitzer, President - NCC
– (NYSE:TDS, TDS.S)
• 8th
Largest Telephone Company
• 750 thousand customers
• $5 billion i...
Tom Millitzer, President - NCC
…TDS / Visi --- the deal
• $17.5 Million Cash
• 1.45 to 1.75 X annual revenues
• 5.8 X EBIT...
Tom Millitzer, President - NCC
…TDS / Visi deal - revealed
• - Visi has been transitioning - ISP to Hosting Company.• - Vi...
Tom Millitzer, President - NCC
…TDS / Visi –….
• - They speak the same language.• - They speak the same language.
- TDS ac...
Tom Millitzer, President - NCC
…Visi deal – great timing….
- Total tax savings up to $1,940,000 – 11.1% of the deal.
- $20...
Tom Millitzer, President - NCC
…8x8, Inc. Acquires Central Host – May
2010
Tom Millitzer, President - NCC
• (Nasdaq:EGHT)
• VOIP Company
• 20,000 SMBs (avg rev - $250/mo.)
• $63 million annual rev ...
Tom Millitzer, President - NCC
…8x8 / Central Host --- the deal
• $1.6 Million
• 1.6 X annual revenues
• 6.4 X EBITDA
• $1...
Tom Millitzer, President - NCC
……what 8x8 acquired…
- 8x8 acquired product line to sell into 20,000 SMB’s
- A product to i...
Tom Millitzer, President - NCC
…Savvis Acquires Fusepoint –
May/June 2010
Tom Millitzer, President - NCC
(Nasdaq:SVVS)
• IT – Cloud – Managed – Colo - Bandwidth
• 4,200 IT customers – Likes vertic...
Tom Millitzer, President - NCC
…Savvis / Fusepoint --- the deal
Signal Hill - Represented Fusepoint
• $124.5 M Cash transa...
Tom Millitzer, President - NCC
……what Savvis acquired…
- Savvis has a large vertical Financial market sector, lucrative…
-...
Tom Millitzer, President - NCC
• (NYSE:CBB
• $525 million cash transaction
• Data Center deal –
• 12.5X EBITDA
• 9X rev
• ...
Tom Millitzer, President - NCC
And just to note…the market shift…
Tom Millitzer, President - NCC
....the Cloud today –
The Cloud will create
what I term…..
Tom Millitzer, President - NCC
…Inverted Synergy Paradigm
Tom Millitzer, President - NCC
…. Inverted Synergy Paradigm
WHERE...
• Synergy improves my Base EBITDA
• The acquisition d...
Tom Millitzer, President - NCC
… U Reduce OUR Costs
… WE Build On YOUR Efficiencies
… WE Reconfigure OUR Assets
…WHERE
Tom Millitzer, President - NCC
Where is that 4 year Payback now?
Tom Millitzer, President - NCC
- Growth like this equals =
Great
Valuations......
Tom Millitzer, President - NCC
Visit go to the press
release section of
www.com-broker.com
Want more
detail?
Tom Millitzer, President - NCC
Thank You
Please Fill out the Comment Form
@ HostingCon Call or Text 239-938-6566
tomm@com-...
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Cloud Valuation - M&A - HostingCon 2010

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Cloud Valuations in the Web Hosting SaaS industry - A macro look on how concerns will change the face of the Web Hosting Industry and spur valuations.

These slides are from HostingCon 2010 - Austin, Texas - Presented by Tom Millitzer President of Millitzer Capital 239-282-5550

Published in: Technology
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Cloud Valuation - M&A - HostingCon 2010

  1. 1. Tom Millitzer, President - NCC Tom Millitzer – President NCC International Cloud Telecom Valuations MatriXIn A New
  2. 2. Tom Millitzer, President - NCC Tom Millitzer – President NCC International  Internet M&A Firm Founded 1994  Over 300 Completed Assignments  Sold our first Hosting Firm in 1997  Represent Selers
  3. 3. Tom Millitzer, President - NCC Tom Millitzer – President NCC International I want to do business with you.... tm@com-broker.com
  4. 4. Tom Millitzer, President - NCC What we will do today…  Valuation Theory in the 4th and 6th Dimension  Deals  Cloud Valuation and the New Matrix  Where does this Cloud between Internet and Telecom…  Deal Strategy Timing
  5. 5. Tom Millitzer, President - NCC The provider…End user. . .
  6. 6. Tom Millitzer, President - NCC Rule of 4 – Valuation Theory  Multiple of EBITDA  Multiple of Revenues
  7. 7. Tom Millitzer, President - NCC …. Operating in the 4th Dimension Classic “Shared Hosting” 1X Annual Revenues .25 X 4 = 1 The base acquisition should pay back in 4 years. 25% EBITDA
  8. 8. Operating in SYNERGY Dimension • SYNERGY………
  9. 9. Tom Millitzer, President - NCC … WE Reduce Costs … WE Build On Our Efficiencies … WE Leverage Assets
  10. 10. Tom Millitzer, President - NCC …. WE Operate in the 6th Dimension 6 x EBITDA = 4 x Post Synergy • Synergy should move most deals to a 40% Accretive EBITDA
  11. 11. Tom Millitzer, President - NCC …. Operating in the 6th Dimension Tex t 4 X 6 X
  12. 12. Tom Millitzer, President - NCC …base 4 to 6 X EBITDA Valuation Range 4-6 EBITDA is often the “comfort” or “negotiating start range ” The greater the synergy the greater outcome and possibly the new decent “Inverted Synergy” outcome.
  13. 13. Tom Millitzer, President - NCC …base 4 to 6 X EBITDA Valuation Range is the floor for Cloud services
  14. 14. Tom Millitzer, President - NCC …ENOUGH … We want to look at some real deals…
  15. 15. Tom Millitzer, President - NCC … March 2010 TDS acquires
  16. 16. Tom Millitzer, President - NCC – (NYSE:TDS, TDS.S) • 8th Largest Telephone Company • 750 thousand customers • $5 billion in annual revenues • $670 million cash on hand. • Visi – Managed Hosting – Cloud entrant • $10-12 million Annual Revenues –
  17. 17. Tom Millitzer, President - NCC …TDS / Visi --- the deal • $17.5 Million Cash • 1.45 to 1.75 X annual revenues • 5.8 X EBITDA (assuming $12m rev X 25%) • $17.5 Million Cash • 1.45 to 1.75 X annual revenues • 5.8 X EBITDA (assuming $12m rev X 25%) Signal Hill - Represented Visi
  18. 18. Tom Millitzer, President - NCC …TDS / Visi deal - revealed • - Visi has been transitioning - ISP to Hosting Company.• - Visi has been transitioning - ISP to Hosting Company. - Revenues 50% broadband - 50% Hosting Related. Hosting portion possibly: 2X Annual Revenues 8X EBITDA May have been higher. - Visi launched Cloud in December 2009
  19. 19. Tom Millitzer, President - NCC …TDS / Visi –…. • - They speak the same language.• - They speak the same language. - TDS acquired product line to sell into 200,000 (est.) SMB’s - A product to increase customer stickiness and loyalty. - TDS understands DSL and Broadband - Will achieve synergies. - TDS obtained a product line outside of PUC rate regulation.
  20. 20. Tom Millitzer, President - NCC …Visi deal – great timing…. - Total tax savings up to $1,940,000 – 11.1% of the deal. - $20 million to obtain the same result as of January 1, 2011
  21. 21. Tom Millitzer, President - NCC …8x8, Inc. Acquires Central Host – May 2010
  22. 22. Tom Millitzer, President - NCC • (Nasdaq:EGHT) • VOIP Company • 20,000 SMBs (avg rev - $250/mo.) • $63 million annual rev (ttm) • $17 million cash on hand. Central Host – Managed Hosting $1 million Annual Revenues – Avg account $2,300/mo.
  23. 23. Tom Millitzer, President - NCC …8x8 / Central Host --- the deal • $1.6 Million • 1.6 X annual revenues • 6.4 X EBITDA • $1.6 Million • 1.6 X annual revenues • 6.4 X EBITDA NCC International - Represented Central Host
  24. 24. Tom Millitzer, President - NCC ……what 8x8 acquired… - 8x8 acquired product line to sell into 20,000 SMB’s - A product to increase customer stickiness and loyalty. - Leverage a great sales organization. - Increase margins and increase Avg. Rev.
  25. 25. Tom Millitzer, President - NCC …Savvis Acquires Fusepoint – May/June 2010
  26. 26. Tom Millitzer, President - NCC (Nasdaq:SVVS) • IT – Cloud – Managed – Colo - Bandwidth • 4,200 IT customers – Likes vertical markets • $870 million in annual revenues • $146 million cash on hand. (3-31-10) • 25% EBITDA Fusepoint – - Managed Hosting – Cloud entrant - Toronto - $47.5 million Annual Revenues – - 50% managed servers, 30% Colo, 20% App Services - 25% EBITDA
  27. 27. Tom Millitzer, President - NCC …Savvis / Fusepoint --- the deal Signal Hill - Represented Fusepoint • $124.5 M Cash transaction • $47.5 M Annual Revenues • 2.62 X Annual Revenues • 10.4 X EBITDA
  28. 28. Tom Millitzer, President - NCC ……what Savvis acquired… - Savvis has a large vertical Financial market sector, lucrative… - Fusepoint – right place – great reputation – right time. - Wanted immediate Canada expansion…Toronto financial hub. - Savvis not sure what to do w/ SaaS - Savvis stated: “near” immediate $8 million reduction in costs – REALLY 6-7 EBITDA? (vs 10.4)
  29. 29. Tom Millitzer, President - NCC • (NYSE:CBB • $525 million cash transaction • Data Center deal – • 12.5X EBITDA • 9X rev • 163,000 sq ft of datacenter @ $3220 per sq ft. • (NYSE:CBB • $525 million cash transaction • Data Center deal – • 12.5X EBITDA • 9X rev • 163,000 sq ft of datacenter @ $3220 per sq ft. Jan 2008--Cincinnati Bell acquired GramTel USA, a disaster recovery,, data backup and co-location services. in a transaction valued at approximately $20 million. Est – 3.5X annual revenues. Acquires CyrusOne
  30. 30. Tom Millitzer, President - NCC And just to note…the market shift…
  31. 31. Tom Millitzer, President - NCC ....the Cloud today – The Cloud will create what I term…..
  32. 32. Tom Millitzer, President - NCC …Inverted Synergy Paradigm
  33. 33. Tom Millitzer, President - NCC …. Inverted Synergy Paradigm WHERE... • Synergy improves my Base EBITDA • The acquisition dramatically improves my base business. • My business experiences a true paradigm shift.
  34. 34. Tom Millitzer, President - NCC … U Reduce OUR Costs … WE Build On YOUR Efficiencies … WE Reconfigure OUR Assets …WHERE
  35. 35. Tom Millitzer, President - NCC Where is that 4 year Payback now?
  36. 36. Tom Millitzer, President - NCC - Growth like this equals = Great Valuations......
  37. 37. Tom Millitzer, President - NCC Visit go to the press release section of www.com-broker.com Want more detail?
  38. 38. Tom Millitzer, President - NCC Thank You Please Fill out the Comment Form @ HostingCon Call or Text 239-938-6566 tomm@com-broker.com www.com-broker.com 239-282-5550

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