What is a business worth?

M

morph

New member
I know it usually depends on several factors, but I have seen different formulas tossed around.

So For Example: Let's say you have a client base for shared and reseller hosting. The average monthly revenue per client is about $20 with total annual revenue at about $15,000. Most clients are long term clients, 2 years or more.
In your opinion on average what would this business be worth?
 
For small company yes it is, where for larger company it wont as other expenses are higher like employee payment and so on so for small company it is worth
 
With the shared hosting if you are able to generate additional business from existing client by providing them additional features like domain registration, backup plans, website builder , website development etc.. then that should also help you to grow your company.
 
morph said:
I know it usually depends on several factors, but I have seen different formulas tossed around.

So For Example: Let's say you have a client base for shared and reseller hosting. The average monthly revenue per client is about $20 with total annual revenue at about $15,000. Most clients are long term clients, 2 years or more.
In your opinion on average what would this business be worth?
Click to expand...

Are you asking with intent to sale? Should we guide you on how much to ask for? Worth in terms of what?
 
Is it 15k/mo ? whats profit percentage? do you own any hardware? do you own any IP blocks? those factors play big role in estimating the price.
 
As MrRapidHost asking we'd need to know a lot of other factors in order to come up with a rough price range.

It's also going to come down to being worth as much as someone will pay.

With a revenue of $15,000/year we'd need to know the expenses + profit
 
Why do people always post these type of offers and once they get interested parties they never provide the information that is needed to do the real valuation?
 
Hello.

Normally when we purchase a company we calculate how much it would value to us not its value in general. If you are a large company operating costs of a 15K company would be very low so we dont really care about their profits and make an offer based on income alone.

With that being said, with the limited details you have provided this company would value something around $7500-15,000.
 
For the hosting industry, it tends to be based on 1x annual revenue, then the value can go up or down based on other factors.
 
1X annual revenue is about average, but this depends on a lot of factors as mentioned earlier. Distressed companies typically go for lower just to get out from under.
 
I'm currently reviewing some potential acquisitions of smaller client bases at the moment and one thing frustrates me...

I've seen a high number of providers who have a particularly high proportion of annual paying customers which, generally speaking, is not so much of an issue. But most of them seem to have had their bulk of renewals in April/May and looking to sell the business come July. That straight away is going to write down your value, because I have the cost of hosting those clients without seeing a $ for a number of months.

Plus, there's no guarantee after that time they will stay with you too. Just because they're one persons long term client, doesn't mean they'll become my long term client, so I tend to let that phrase go over my head a little when talking to people about their businesses.

It's hard to say. But anything from $5k upwards. If you have some owned IP allocations directly issued from say ARIN or RIPE... then we're talking some more dollars there too.
 
I'd say it would be best to start at 1x annual revenue though this can drop slightly depending on factors but can go all the way up to around 4x -- but this is rare but has happened.

There are many factors that will come into play: reputation, cancellations, how long clients remain with you, do you own your hardware, does your setup matches theirs (cPanel etc) and so on.
 
morph said:
I know it usually depends on several factors, but I have seen different formulas tossed around.

So For Example: Let's say you have a client base for shared and reseller hosting. The average monthly revenue per client is about $20 with total annual revenue at about $15,000. Most clients are long term clients, 2 years or more.
In your opinion on average what would this business be worth?
Click to expand...

1X as a general rule of thumb however other factors include assets, longitivity of the business, scalability i.e. potential. Many diamonds in the rough and the turn around? Absolutely fabulous! However 15K regardless if a month or year, if total expenditure is 16K a month or year, is a sinking ship and the hole needs to be patched.
 
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