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1. Business service offerings and
liquidity

5. Valuation Difference:

6. Something I have seen many times is the owner/decision
maker on the sell side has heard web hosting company
valuation formulas and wants to apply that formula to his
company. Inevitably the owner is disappointed when the
offer comes up short in their mind, and passes on what
actually is a fair valuation.

7. Design Services:

8. The decision to staff up and start offering web design
services to complement the pure play hosting recurring
revenue is a huge decision with regards to the effect on
business liquidity. Of course design services can be a
natural fit with hosting clients by helping to reduce client
churn and up selling existing clients. However, the value
of the revenue and cash flow generated from one-time
design jobs is no where near the value of the recurring
hosting revenue and cash flow.

9. Negatives of design departments when it comes time to
sell:

13. Internet Data Center:

14. Investing in an IDC may increase the value of the entire
company by an enormous amount over time, but
definitely reduces the liquidity in the short run. Typically
smaller web host co-locate in the beginning, then at a
later date acquire their own data center. In turn, the
company will then offer space to other smaller host hence
creating yet another service offering.

16. Please visit:
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