The tale: Hillary Stiff of Cheval Capital (Competitor of my firm NCC) and self proclaimed "buyer's broker" made a presentation at HostingCon. Paul Stapleton of DH Capital (Also a competitor of NCC) used several pages of Ms. Stiff's HostingCon’s presentation, with permission and fully disclosed, at his Tuesday luncheon presentation at HostingCon. Paul stated that the analysis of Ms. Stiff was based on many "…Rat's ass cheap" transactions.
It sort of was like a Pirate not caring about tomorrow as Paul stated "rat's ass cheap". I raised my hand and basically said NCC (my company) agrees. Frankly Paul is fairly mild mannered, Paul broke out of his shell.
Paul's major point was that Ms Stiff used many cheap transactions in her analysis that implies web host company values are dropping. Paul was basically indicating that if you include as a primary component in the analysis many "rat's ass cheap" deals that it deflates the true market. Apparently from Paul's perspective Stiff does many deals that fit this new category.
About 6 years ago I observed that during a presentation at ISPCON a "buyer's broker" analysis provided valuations which were consistently 15-20% less than I was experiencing in the market. Bottom line is that I presume that a "buyer's broker" would not be serving the best interest of their client (the buyer) by obtaining a full market price. Recently I have had offers from "buyer's brokers" that are in excess of 30% lower than the final price.
As a clarification – my firm (NCC) represents sellers.
Paul Stapleton is one of the panel members on the M&A panel I am moderating on Wednesday, I hope this session will be as enlightening as the fabled luncheon.
HostingCon Wednesday – I will be moderating a M&A session at 3:30.
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