The document discusses valuation multiples for public cloud and hosting companies, noting they typically trade within 8-12x EBITDA. It also provides rules of thumb for private market valuations, such as consolidating shared/VPS acquisitions at around 1x revenues and larger EBITDA deals from 5-8x EBITDA. Significant recent transactions include Rackspace's buyout at 7x EBITDA and GoDaddy's acquisition of HostEurope Group at 12.1x EBITDA.

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2. THE GLOBAL EVENT FOR THE CLOUD AND
SERVICE PROVIDER ECOSYSTEM
Public Company Valuations
* - Growth rates affected by acquisitions
Takeaways
• Public companies trading within historic ranges of 8x & 12x EBITDA
• Strong organic growth gets higher multiples
Annualized EntValue Enterprise Value / Seq Qtrly
Rev GrowthCompany Revs ($mil) ($mil) Revenues EBITDA
Wix $ 337 $ 2,805 8.3 39.2 11.3%
GoDaddy $ 1,944 $ 7,176 3.7 25.2 2.9%
IOMart Group $ 105 $ 428 4.1 9.7 10.4%
Endurance Int'l $ 1,168 $ 3,116 2.7 9.0 0.3%
Internap $ 296 $ 564 1.9 6.5 0.2%
Dada $ 64 $ 114 1.8 12.0 0.0%
United Internet $ 4,386 $ 10,346 2.4 10.5 3.6% *
Web.Com Group $ 749 $ 1,636 2.2 8.6 39.4% *
Melbourne IT $ 129 $ 183 1.4 8.5 12.1% *

3. THE GLOBAL EVENT FOR THE CLOUD AND
SERVICE PROVIDER ECOSYSTEM
Growth vs. Valuation
Source: Byron Deeter, Bessemer Venture Parters, 2016

4. THE GLOBAL EVENT FOR THE CLOUD AND
SERVICE PROVIDER ECOSYSTEM
Private Market & Transactions
Private Market Rules of Thumb
- Consolidating Shared & VPS acquisitions ~1.0x Revenues
- Consolidating Dedicated acquisitions ~0.8x Revenues
- Non-consolidating/Platform acquisitions
> Smaller EBITDA ~2-4x EBITDA
> Larger EBITDA ~5-8x (+) EBITDA
> “Must Haves” ++
- Organic growth can increase/decrease multiples
Significant transactions
- Rackspace buyout $4.3B ~7x EBITDA
- Windstream acquisition of EarthLink $1.1B ~5.3x EBITDA
- GoDaddy’s acquisition of HostEurope Group $1.7B ~12.1x EBITDA
- United Internet acquisition of Strato € 600M ~12.4x EBITDA

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