Buy a web hosting company

For more advice on how to sell your web hosting clients, go to our Further Advice page here.

There are definite steps to follow to successfully sell your web hosting clients.

Firstly, prepare your business for sale

by following these ten helpful steps.

• Make a list of all the domain names
• Ensure the contact details of the clients are current and accurate
• List the server specifications
• Compile all agreements and  partnerships associated with the business
• Have usernames and passwords plus expiry dates, for all licences
• Collect any outstanding payments
• Suspend sites who are overdue for payment
• Receipt all payments in your accounting program
• Prepare accurate profit and loss, balance sheet and cash flow statements
• Update the business website if necessary, by removing irrelevant content

Next, prepare the sale offer.

At this stage it is important to be as specific as possible.

• List all the products and services provided by the business and the cost of these
• List the purchase dates of assets/equipment  and any current warranties that are still valid
• Present information about the client numbers and revenues in a clean and clear fashion
• Break down the billing and payment cycles by each client
• Explain what control panel is used.
• Provide a brief description of the history of your business, and the reputation it has
• Explain what is used as the main source for new business
• Explain whether your web hosting client base falls into a particular niche
• Explain the percentage of referrals and the longevity of the clients.
• Provide statistics for traffic to your website and what the conversion rate is.
• Calculate and show the growth rate of the business over annual periods

Now decide what you are prepared to ask for the web hosting client base.

As a general rule of thumb a web hosting client base will sell for 8-12 months of its annual revenue, if it is under $50,000 in value. If between $50,000 and $1000,000 it might sell for 15 months of its revenue. Different aspects make a web hosting client base more attractive to buy than others. A lot of this has to do with the payment cycle and whether most clients have just paid their annual fees, prior to the sale, or whether this will occur just after the sale. Obviously, payment due just after the sale is much more preferable. These and other factors make buying a web hosting client base a better business proposition and give true value, not just perceived value.

The next step in selling your web hosting client base is to advertise it.

Now there are a variety of web hosting forums available who allow business owners to offer their web hosting clients for sale. This can be risky though, because you do not want your clients finding out that you are selling them to another web hosting company, because they may decide to leave, because of this, rather than you sell them to someone else.

We are very happy to discuss with you, in private, using complete confidentiality, any plans you have to sell your web hosting clients. You can be sure your clients will not know. You can take all the unknown factors out of the equation and deal with us at Newhost. We are trustworthy, we know the business well, and we are prepared to negotiate with you on a fair and reasonable playing field so that we all feel that it is a win-win situation.

Finally, it is time to make the sale.

• Finalise all financial and technical information
• Strategise the ongoing support requirements
• Undertake a sale and purchase agreement
• Seek legal and/or financial advice if required
• Confirm payment terms and transition stages

Once completed, it is generally accepted that the previous owner will assist throughout the transition phase, on average, for 3 months, so that the clients have some consistency should they need any assistance. It is also acceptable that the previous owner will agree to a restraint of trade for 1 year. This is to prevent the previous owner from further offering services to the client base they have sold.

At Newhost we like to work closely with those owners whose web hosting client bases we have purchased,

so that there is a clear understanding of the procedures. We believe it is this that has created our success to date.

For more advice on how to sell your web hosting clients, go to our Further Advice page here.