Thinking about buying a small company out.

Hi,

Well later on in febuary I am thinking about buying out a small hosting company, with a few clients, the guy I am considering buying out has got: 15 clients making £100/yr, I have never bourght a hosting company before, what should I be looking for?

I have no idea if he is lying or not, ive never been in his billing panel or nothink, I have no evadence that he has 15 cleints paying that much a yr.


can anybody help me out.

- Jim

 

Look for revenue, profit, traffic, whether or not billing is subscription based and how easy it is to maintain.

Good luck!

 

Only thing you can do to be able to prove he has those clients is to ask him for the documentation to prove it. Make sure you have this and details on traffic and conversions before even considering purchasing.

 

Get an attorney and an accountant if you don't already have one. Check out their contracts and their books. You'll thank yourself for the investment later...even if you decide not to buy.

 

At least get an attorney to manage the transfer of assets. This isn't really something that you can rely on a gentleman's agreement about.

 

Also check the profit making ability of particular site before you buy.

 

well,

thanks for the repliys, the person I am going to buy off has 15clients making over £100 a year, i'll try and get some docs..

 

What you need to know is what control panel they're using, if he has a dedicated server for them, how much space and BW he's given to each of them, etc...

To be honest there isn't much point in getting a lawyer or acct involved in such a small deal, you shouldn't be paying more than a year's revenue for hosting clients so one hour of a decent lawyer's time will cost you more than the entire acquisition cost.

 

He must be able to show revenue receipts

 

I was just going to say that about the cost of a lawyer. They cost too much for such a small job.