For some reason we tend to block things into these 12-month sections based on Midnight 01 whatever. As a time pilot I think this sounds ridiculous, ask Einstein. But I think I can put some rhyme and reason to this subject.
As a business, web-hosting firms had a great year in 2009. Where were the bankruptcies? Where were the failures? Stack that up against the overall economy. You made money; you invested in new capital equipment, paid yourself well and are holding onto cash. One reason you have the cash is because there were fewer deals to do and tax rates were favorable.
As your cash position increases you either have to invest in new equipment or acquisitions, or pay taxes. You want to do deals.
The Legacy of 2009. From all indications, reports and comments; hosting company acquisitions were down in 2090, message to file make that 2009. From various nonscientific sources such as insider industry comments, the numbers of deals were down about 30%. The reason for this is somewhat unobvious, because for medium and small deals there were plenty of buyers. From my perspective values were flat to a tad up. Flat is not necessarily bad.
Sellers just stayed on the sidelines. Fallout so to speak, this was based on no great reasons other than uncertainty. There were plenty of good tax reasons; hosting company values were at worst stable. Yes the “seller” hosting market lackluster was based upon uncertainty promulgated by daily reports of that very blah sucking 2009 economy and that 2008 hangover. So is life.
It is time to forget 2009 and 2008 is ancient history. You are dealing with a new world, renewed hope, a new tax year and a new budget year. Einstein would agree that on the surface it sounds like a balance sheet, but it still is constrained within the curvature of space and time, one where your decisions make the change and cause the direction.
Happy New Year Tom
More about Tom: NCC – the Hosting Business Broker Twitter: – TomNCC and WebHostBusiness
