Summarized below is an estimate of the relative valuations of some of the major hosting companies as of February 1, 2009.
Annualized Enterprise
Company Revs ($ mil) Value/Revs
United Internet $ 2,081 1.3 x
Savvis $ 873 1.1 x
Rackspace $ 553 1.3 x
Dada $ 229 0.8 x
Navisite $ 159 0.9 x
Web.Com $ 122 0.6 x
Peer 1 $ 94 1.2 x
Group iWeb $ 15 2.0 x
As always, please feel free to contact us if you have any comments, or questions.
Cheval Capital, Inc.
Calculation Notes
Enterprise Value formulas: We typically look at two formulas for calculating Enterprise Value and make adjustments from there if necessary.
- Enterprise Value = (Fully Diluted Shares * Current Stock Price) plus Debt (long and short term, including capital leases) less any option exercise proceeds for unexercised, in-the-money, options included in Fully Diluted Shares.
- Enterprise Value = (Fully Diluted Shares * Current Stock Price) less Current Assets plus Total Liabilities less any option exercise proceeds for unexercised, in-the-money, options included in Fully Diluted Shares.
The reason why we look at two formulas is that some companies have unusual balance sheet items, e.g. large cash balances, that can distort valuation.
Multiple of Revenue: The reason that we use a multiple of revenue to compare these companies is that they all have very different capital and operating structures and compete in different parts of the hosting business. While not a great way to compare companies, we believe that for high level comparisons it is the most straqightforward.
Source of the data: All data was taken from public financial statements for the quarter ended September 30, 2008.
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.