This post in Daw blog follows one in Web Hosting Talk where I’ve just replied to a thread where someone asked “How much my company worth?”.
The price of an average web hosting company went down within the last 18 months. The reason is that Wall Street decided to pay attention on our industry and to flew some money in web hosting. Since then the price of an average shared web hosting business (as well as VPS providers and some types of business dedicated hosts) dropped about five times.
You can see many suggestions from “financial experts” who have explained to the public that the owners of web hosting companies have to be contented if they succeed to sell their business for the money they earn from customers for one year.
Getting no more than the annual revenue of your hosting company however is not a good deal. Most owners and shareholders of budget and shared hosts now think that all this is true. And many sold their business for less than they worth.
I think that as any other dot-com business, web hosting company is an unique combination of domain, trade mark, a service model and its know-how. Some hosts have their own proprietary software applications some don’t. But even when a web host uses standard software applications it has satisfied customers who think it is worth to trust the company.
I’ve written in WHT that only a domain name of a well-known small web host can bring their owners a enough money on annual base if they place ads instead of providing hosting services. There are many other assets which owners of hosting companies may not underestimate. So never sell your company for its annual revenue! It costs more!