finance

Breaking Down the Numbers of the Media Temple Acquisition

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Most IPOs have too much to digest in a single blog. Information tucked away, and acquisitions where the details start to drift out. In the case of GoDaddy there is one acquisition to sort out: the Media Temple transaction. Trust me, I had to scour the internet to piece some of the data together, and some is my best guess, which is always in the ballpark. Also, I have to eat some crow.

GoDaddy purchased Media Temple late last year. Media Temple remains its own brand and to this day GoDaddy has not positioned it as a GoDaddy company. Good move.

Media Temple is not a budget, low-price shop. General hosting starts at $20 and WordPress hosting starts at $22. When you start looking at dedicated servers the Developer Plan server is $2000. As a smell test my estimated revenue comes in at $45 a customer. According to the S1, there were 120,000 MT customers.

On October 17, 2013 the transaction closed and GoDaddy purchased 100 percent of the stock of Media Temple, Inc. for total consideration of $94.5 million in cash. It looks like $20.5 million that was cleaned up on the liability side of the balance sheet leaving $70 million for distribution.

The question we all want to know is valuation. And what we need for that are some hard numbers. I had to go to Inc’s 5000 reports to find these.

In 2012, Media Temple had revenue of  $52.3 million up from 2009 revenue of $28.5 million. For my calculations I used $64 million in revenues. That conveniently makes this a 1.5X revenue transaction valuation. People like round numbers.

Now for that crow I have to eat. In my most recent blog I stated that GoDaddy’s EBITDA was 5x that of Endurance International Group. I pulled the EIG EBITDA number off of Yahoo Finance and that number was incorrect. EIG contacted me, no they did not ask me for a retraction or anything like that, just asked me where I got my number. What I thought was a $69.35 million EBITDA is really according to EIG’s  2014 guidance, approximately $230-235 million.

About the Author

My M&A firm has focused on the Hosting sector since 1997. I want you to fulfill your dreams. If you are building your company or exiting for success...I want help you grow rich. NCC has completed hundreds of assignments. We are international. If you are considering buying or selling in the hosting sector you need to know me. I do not bite.

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