August 22, 2005 -- (WEB HOST INDUSTRY REVIEW) -- While the hosting industry has seen plenty of regular mergers and acquisitions activity, some have waited patiently before making the leap. On Monday, New Jersey-based uplinkearth (uplinkearth.com) announced that it had completed its first acquisition since opening its doors in 1997, closing a deal to buy Canadian Web host Nevidia Internet Solutions (nevidia.com).
Michael Yablonowitz, president and CEO of uplinkearth, told the Web Host Industry Review that the acquisition was a perfect fit. Both companies specialize in hosting on the Windows platform for the small business market, stress customer service and have extremely high customer retention rates. And because Nevidia had already moved its servers to uplinkearth's data center, the companies could be sure that Nevidia's customers enjoyed a quality hosting environment and were likely to be satisfied long-term customers.
"A lot of people don't have that when they buy a company, they just hope that the network they are on is good," says Yablonowitz. "From a technical standpoint, we knew it [Nevidia] was rock solid."
Yablonowitz says the company began looking at potential acquisitions about a year ago and struck up conversations with companies it felt could be a good fit. Uplinkearth immediately developed a good rapport with Nevidia, he says, and before long the company had moved its hosting infrastructure to uplinkearth, which owns and operates its own data center. Before long, Nevidia decided to exit the market and the negotiation process began. After about five months and a few stumbling blocks, the deal was done.
The cash positive deal increases uplinkearth's customer base by 20 percent and opens the door to the Canadian market. Yablonowitz says it will also present opportunities for uplinkearth to up-sell other small business services to Nevidia customers.
But more importantly, says Yablonowitz, the deal is the first of what the company hopes are many acquisitions that will increase its total market share. Yablonowitz says uplinkearth waited a little longer than most to jump into acquisitions because it wanted to be sure it fully understood the hosting market and was in the best possible position to succeed, before taking on other people's customers. Time has also enabled the company to achieve the right economies of scale.
"We are at the point now where acquiring companies is actually cost effective for us, so what we are looking to do now is not only increase our product line, but increase our customer base by purchasing other hosting companies that are looking to exit the industry."
The acquisition will not result in any changes in service and the Nevidia name will not be changed. "We are leaving everything as it currently stands, the customers are not going to see any change in service," says Yablonowitz, "basically its going to be another entity for us."
Although financial terms of the deal were not disclosed, Yablonowitz says the company paid the equivalent of approximately one year's revenue for Nevidia. The management team at Nevidia will remain in place and most of the company's staff will be retained.
"By retaining people that are already there, I'm hedging my bets," says Yablonowitz. "I know that those people will provide the same type of support, the same level of service."
Uplinkearth does not care about their customers (I WAS a Nevidia customer for four years). I opened a trouble ticket due to a problem that occured during the takeover which went unresolved for over a month (though I tried five times over that period to get an answer). Finally, I sent an e-mail to their sales department telling them about the problem and asking for a refund on the year renewal of service I had just paid for. Rather than trying to resolve the issue, they immediately removed my account and my files with no warning. I couldn't transfer anything before my request since I had no way to know whether they would honor my refund demand. I lost six websites and over 30 e-mail account settings and have no way to recover them. posted by: Rick Sutter | December 21, 2007 12:12AM
