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Why LowEnd Hosts Deadpool vs. Selling Business?
Offshore_Solutions
Member
Why would you guess lowend hosts like DowntownHost & HostSolutions choose to deadpool instead of putting themselves up for sale?
Do you suppose there could be more money in deadpooling and keeping prepaid funds instead of selling to someone interested in their customers?
Both DowntownHost & HostSolutions had many clients and have been operating since at least 2015. Granted HostSolutions prices were too low to be sustainable, but many of his customers may have tolerated a minor price increase.
Seeing how certain companies will pay a premium for customers, it's surprising they don't feel they have equity in there brand and customer base that would interest a buyer.
Comments
because they are unprofitable and Noone wants to buy an unprofitable buisness
If they don't have owned assets or IPs they're of no value. If they do, they're usually acquired.
Customers aren't a good purchase, they'll leave. Especially if there's a reason they didn't pick your brand to begin with.
It's human psychology 101. In the majority of these cases, people involved didn't startout with a target of deadpooling (now I am just making up these words). It's human nature to fight for survival, and in this case, til the end. It requires a calculating mindset to sell ones business so others can benefit instead of fighting till the end, and, errrr 'deadpooling'.
Based of off all the offers I have received, majority of them aren’t salvageable
.
Most of the LE hosts works with horrible math and negative ROI, which means, followed with very meh brand value. Mostly due to the fact that, a lot of folks play catch-up game, where they are relying on promo to pay the next bill.
So when you do take them on, you start off with negative equity. Now with that said, there are some, who won’t sell due to pride and due to human nature, once they can’t fight anymore, hiding down becomes the next step. Just human nature as most of us don’t like the to face the problem
A smart business man works with plan B, C, D and knows when to quit. A proud or young ones don’t.
This exactly.
I've seen or given advice on at least 3 - 4 company buyouts and every time it comes down to basically $asset_value + 10 - 15% on top.
I've seen multiple buys where the customers were 'free' and it was just bartering the value of the gear. Besides, most buyouts I see ends with close to 50% (sometimes even more) of the customers walking before renewal as they're afraid things will be worse.
Unless there's basically a guaranteed improvement in quality (better hardware/network, the owner actually responds to tickets within a month, etc), people just leave.
Francisco
Other than this exactly, I for one would love a detailed post
What more would you like to know?
I can add plenty more detail.
Francisco
As already noted, there is often nothing of value to sell.
The majority of hosts that establish themselves on LET to gain customers are already Deadpool, it is just a matter of time.
The only way for 99% to compete here as a new provider is to be as cheap or cheaper than the cheapest. You will never be able to charge more, well, you can but nobody will pay it. Why would they? There will be another provider doing it for less.
The number of current providers on here funding shortfalls in operating costs from their own pocket will be high.
When it comes to an end all you have is customers and rented equipment or even just reseller accounts. The customers that do remain will only continue to do so if you honour the pricing that made the service fail in the first place.
Provider after 6-12 months offering that price.
Also that price range brings such "nice" customer that can eat your support agents brains out.
It depends what new provider means.
For example, Prometeus was established in 1997 but appeared here cca 2012 (i dont even remember). It was a new provider here and put to use some used HW.
Of course, there was a steep learning curve, we had to add ddos mitigation, strict policing of abuse of all kinds (disk/cpu/network/ToS violations/plain illegal stuff etc.)
It was a good thing, the business was getting somewhat stale with only big corporations and when the DDoS started to mount, for example, and they were attacked too we were ready to mitigate and this meant that, even the new owner of one of them which wished to move away, reconsidered given our prompt reaction.
Politics here forced uncle to abandon LET and I have been banned repeatedly so the place is much better now.
This pretty much matches what i have seen. Even if you are quick on tickets,feature good quality hardware and keep the pricing/... the same....
What i also found is that most of the ones i was looking at acquiring/got offered are overstating their customer counts/operational size.
Yes. I've toyed with the idea of selling but the offers were all terrible. The customers are basically given no value, which is ridiculous.
We own our own DC. That includes everything. The real estate, the equipment, the IPs. Aside from some software licenses, and IP transit costs, the only real cost of operation I have is electricity.
It seems hosting companies are either valued on something like 6 months worth of revenue, or the book value of your assets. For a profitable hosting business, it's not worth selling. For an unprofitable hosting business, it's usually not worth buying.
Perfect TL;DR
the volatility of vps services makes the value in a LET hosting company for selling to be 0.We have buy last year one hosting company ( not one from LET ) and have paid only for shared customer and IPs.
We are still looking to buy small hosting companies in Romania and we find many like HS that if you buy you only buy debts and prepaid services for the next 2-3 years as well problems on long term.
@randvegeta
Customers under one year they have no value, mobile goods ( servers.....switch...) have no value.
In the last three years we have been lucky enough to assist and learn how the whole procedure works, being partially involved in the purchase by R22 / H88 of one from 6 hosting companies:
Each of this companies have VPS and dedicated servers clients to but the focus was on webhosting.We have participated as a consultant for xservers.
Therefore only stable and trouble-free companies that have customers older than a year have some value.