Challenging attendees to think like buyers and sellers, Cheval Capital managing director Hillary Stiff hosted “Valuing and Structuring Web Hosting Acquisitions,” an interactive workshop Tuesday afternoon at HostingCon 2009.
It started with some brainstorming about issues that factor into a business’ attractiveness and value, with such answers as long-term prospects, number of clients, and customer concentration. Everyone was given pats on the back.
The session quickly became quickly more competitive as the “Let’s Make a Deal” game began. Tucows CEO Elliott Noss, who divided volunteers into consolidators and strategic/platform buyers. Basically, consolidators tend to care about what the seller’s customers will generate on their platform. Stategics tend to care about the current business as a platform for the buyer’s future operations and/or a technology or product that can be cross-sold to existing customers.
Had he not been so charming, some of Noss’ barbs may have been offensive when he candidly told participants their ideas were wrong.
The game consisted of scenarios. For instance, given that a dedicated host has data centers in different regions on month-to-month, what should M&A make out of it. One hopeful said it would be unstable because the change of ownership may lead to loss of customer loyalty – WRONG. It ought to be a good buy for strategics because it’s a platform to build on.
By the end of the session, participants began getting more right answers, which were not common and required some thinking outside the box. This session, which was as informative as a short session can be, had the added effect of encouraging attendees to learn more about M&A… or hire the experts to handle it.
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