Cheval Capital, Inc.

WHIR Magazine - Better Bookeeping

Check out Hillary's comments in WHIR Magazine's March issue for an article on the accounting issues and hurdles that hosters face when selling their business, seeking financing or finding an investor (pages 34 - 36.)  It is a good background article and if you have any questions or would like to talk more about it please give Hillary or Frank a call. 

Valuation of Public Hosting Companies - February 16, 2011

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations.   Please be aware that a number of these companies have significant other businesses that may also affect the valuations.  (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value - "EntValue".)  

Prices as of midday 2/16/2011
	Annualized	Enterprise Value	EntValue/	EntValue/
Company	Revs ($mil)	($mil)	Revenues	EBITDA
North America
Savvis	$       968	$     3,041	3.1	14.13
Rackspace	$       799	$     5,550	6.9	22.63
Navisite	$       131	$        311	2.4	10.80
Web.Com Group	$       131	$        510	3.9	Neg.
Peer1	$       112	$        232	2.1	9.06
Group iWeb	$         27	$         62	2.3	8.68
Europe
United Internet	$     2,591	$     5,012	1.9	10.42
Dada	$       200	$        195	1.0	11.05
Mamut	$         79	$        118	1.5	8.72
Net Benefit Gp	$         71	$        160	2.3	10.34
IOMart Gp	$         37	$        153	4.2	17.64
Australia
Melbourne IT	$       196	$        217	1.1	7.70

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed.  Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Corrected: 3/11/11

SingleHop CEO Named to Chicago Top 40 Under 40 List

Congratulations to Zak Boca, CEO of SingleHop Inc., on being named to Crain's Chicago Business Top 40 Under 40 List.  The list and interview with Zak can be found here.  The writeup at the WHIR is pretty good as well.

Selling Your Hosting Company

Companies that are beginning to think about selling their business often ask us how the sale process typically works.  While it is not possible to summarize all of the possible ways to sell your business, we can give a brief outline of one way a small hoster might do it. We caution that every situation is different and the outline below may be inappropriate for your company and you should consult your financial and legal advisers before undertaking any sale.  We also want to emphasize that there are many other ways to sell your business that may be as good if not better.

Here are the basic steps the owner of a small hosting company might sell their business.

1. Get ready
2. Find prospective buyers
3. Mutual confidentiality agreement
4. Provide high level information
5. Negotiate and agree on a summary of terms
6. Complete detailed due diligence
7. Negotiate and sign the purchase agreement(s)
8. Transfer/migrate the business to the purchaser

We'll go through each of these steps below;

WHIR Webinar Q & A

We participated in a recent webinar sponsored by The Whir on "Selling Your Hosting Company" where a number of questions did not get answered due to time constraints.  We have taken a shot at answering these questions below.  Please don't hesitate to drop us a note (fstiff [at] chevalcap [dot] com) if you have any questions or comments.

The webinar can be played back here.

Cheval Capital, Inc.