Valuation of Public Hosting Companies - February 25, 2015

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial information and please see this post for how we calculate Enterprise Value.)  If you wish to get a sense for changes to valuations over time, here is a link to some of our past valuation summaries.

* - The financial data for most of the above companies is based on their press releases and is as of 12/31/2014. We will update the valuations when the companies make their SEC filings and more of the European hosters have released results.

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Author: Hillary Stiff is Managing Director of Cheval Capital. She has been an investment banker and CFO, completing M&A transactions and arranging financing for a number of companies including NTT/Verio, The Endurance International Group and Web.Com among many others. She has helped complete over 270 successful web hosting, ISP and related transactions and distributes a list of hosting and related companies that are

Valuation of HostEurope acquisition of Intergenia

Congratulations to the folks at HostEurope and Intergenia on their recently announced transaction. 

Information released by Oakley Capital indicates a transaction value of E 210MM and a run rate EBITDA of more than E 20MM putting the purchase multiple in the 10x or less range on run rate EBITDA.  Given the amount of overlap between the two companies, we expect that, post integration, the contribution margin to be very high making this a highly EBITDA accretive transaction for HostEurope further pushing down their effective acquisition multiple.

Oakley reported a 36% IRR on their Intergenia investment.

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Author: Hillary Stiff is Managing Director of Cheval Capital. She has been an investment banker and CFO, completing M&A transactions and arranging financing for a number of companies including NTT/Verio, The Endurance International Group and Web.Com among many others. She has helped complete over 270 successful web hosting, ISP and related transactions and distributes a list of hosting and related companies that are for sale.

Valuation of Public Hosting Companies - November 17, 2014

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

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 * - The financial data for most of the above companies is as of 9/30/2014. United Internet and Melbourne are as of 6/30/14. Iomart is as of 3/31/2014.

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Author: Hillary Stiff is Managing Director of Cheval Capital. She has been an investment banker and CFO, completing M&A transactions and arranging financing for a number of companies including NTT/Verio, The Endurance International Group and Web.Com among many others. She has helped complete over 270 successful web hosting, ISP and related transactions and distributes a list of hosting and related companies that are for sale.

Valuation of HostEurope's Third Offer for Iomart

It looks like the third time was the charm as Iomart, after rejecting HostEurope's first two offers, has entered into acquisition discussions based on HostEurope's third offer of 300 pence per share. In an earlier post we looked at the valuation of HostEurope's first two offers.  The current offer of 300 pence, by our figures, puts the Enterprise Value of Iomart at approximately GBP 350mm, approximately 15x 2014 fiscal EBITDA.  (Note that Iomart's fiscal year ended March 31, 2014 which likely makes the 15x EBITDA multiple higher than if it were based on current EBITDA.)

Please feel free to contact us with any questions. 

Author: Hillary Stiff is Managing Director of Cheval Capital. She has been an investment banker and CFO, completing M&A transactions and arranging financing for a number of companies including NTT/Verio, The Endurance International Group and Web.Com among many others. She has helped complete over 250 successful web hosting, ISP and related transactions and distributes a list of hosting and related companies that are for sale.

DISCLAIMER: This summary is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell companies or a comprehensive discussion of the risks involved in buying or selling a company. Please be sure to consult your legal and financial advisors when considering the purchase or sale of a business or completing other financial transactions. Cheval Capital assumes no responsibility or liability for any of the information contained herein.

Valuation of HostEurope Offers To Buy Iomart

Last week Iomart PLC (IOM.L) announced that it has rejected two purchase offers from Host Europe Holdings Ltd. 

The offers were at 275 pence and 285 pence or about 14x trailing EBITDA. For context, here is our most recent set of valuation estimates for other publicly traded hosters.

UK law gives HostEurope until August 21 to increase its offer or walk away.

Author: Hillary Stiff is Managing Director of Cheval Capital. She has been an investment banker and CFO, completing M&A transactions and arranging financing for a number of companies including NTT/Verio, The Endurance International Group and Web.Com among many others.  She has helped complete over 250 successful web hosting, ISP and related transactions and distributes a list of hosting and related companies that are for sale.

DISCLAIMER: This summary is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell companies or a comprehensive discussion of the risks involved in buying or selling a company.  Please be sure to consult your legal and financial advisors when considering the purchase or sale of a business or completing other financial transactions.  Cheval Capital assumes no responsibility or liability for any of the information contained herein.

HostingCon 2014 Panel: Understanding Valuation

Thanks to the folks at the WHIR for coverage of Hillary's panel at HostingCon 2014.

Valuation of Public Hosting Companies - June 10, 2014

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

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* - Melbourne IT's large cash balance may distort the Enterprise Value calculation.

** - GoDaddy's recent S1 filing does not include valuation information.

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Valuation of Public Hosting Companies - March 19, 2014

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

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Note - Melbourne IT's large cash balance may distort its valuation ratios.

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Valuation of Public Hosting Companies - February 21, 2014

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

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As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

WIX IPO Valuation - Final

Congratulations to the folks at WIX on the completion of their IPO.  It was priced Wednesday at $16.50/share and closed yesterday at $16.56/share.  Our estimated valuation (assuming no exercise of the underwriters overallotment option) is an Enterprise Value of approximately $680 million, approximately 8x annualized revenues (based on the Q3 2013.) Their EBITDA is too low to produce a meaningful EBITDA multiple.

Wix is in the category of new shared hosters that have emerged over the last few years that feature an easy to use but advanced website design tool much like Weebly, SquareSpace, etc. These hosters offer use of their design tool for free and while some offer free basic hosting, all offer paid shared hosting services.  These services have been growing rapidly and represent one of the few strong growth sectors in shared hosting.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance IPO Valuation - Final

A final note on the valuation of Endurance (EIGI) on its IPO.  Based on its trading price this morning of $11.20/share, it looks like their IPO valuation came out at approximtely $2.3bn, or 10.5x trailing, annualized EBITDA and 4.5x trailing, annualized revenues. 

Please note that this calculation does not include any impact from (1) their pending $100-$100 million DirectI acquisition; or (2) any exercise of the underwriters overallotment (Greenshoe) option.

Please feel free to contact us if you have any comments, or questions.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance IPO priced at $12/share - EIGI

The Endurance IPO was priced last night at $12/share (below the $14.00-$16.00 range estimated in their SEC filings) and the deal size was lowered to 21.05M shares from 23.39M shares.  This reduces my earlier estimate of their valuation to roughly $2.4bn or 11x EBITDA.  I will update this with a more precise figure once the final SEC docs are released.

Trading will likely start mid-morning today under the ticker EIGI.

Please treat this as a preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option, the Directi acquisition or the impact of outstanding Employee options.)  

Please feel free to contact us if you have any comments, or questions.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Wix - Estimated IPO Valuation - REVISED

REVISED: The values below have been adjusted to include the impact of outstanding in-the-money options and warrants.

The offering is expected during the week of 11/4/13.

Wix, an Israeli company that offers a free website design tool together with shared hosting, updated its IPO documents to include an estimated offering price range.  At the midpoint of this range, their Enterprise Value would be approximately $630 million or more than 7x annualized revenues (based on the Q3 2013.) (Their EBITDA is too low to produce a meaningful valuation.)

Wix is in the category of new shared hosters that have emerged over the last few years that feature an easy to use but advanced website design tool much like Weebly, SquareSpace, etc. These hosters offer use of their design tool for free and while some offer free basic hosting, all offer paid shared hosting services.  These services have been growing rapidly and represent one of the few strong growth sectors in shared hosting.

Please treat this as a very preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option or the impact of outstanding Employee options.)  As we get more information we will update our estimates.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance International Group - Estimated IPO Valuation

Endurance updated its SEC filings last week to include an estimated offering range for their upcoming IPO.  At the midpoint of this range ($15/share) and their estimated Q3 EBITDA ($47-$48 million), the valuation of Endurance would be approximately 14.4x annualized EBITDA. 

Please treat this as a very preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option, the Directi acquisition or the impact of outstanding Employee options.)  As we get more information we will update our estimates.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance International Group - Acquisition Valuations

    A few weeks ago, the Endurance International Group released an S-1 filing for a planned IPO of its Common Stock.  The S-1 has a lot of great information on Endurance, its operations and the many acquisitions it has completed.  I'd like to highlight two of their acquisitions here.

        The first was the purchase of Endurance itself on December 22, 2011 (referred to in the S1 as the Sponsor Acquisition.)  An investor group purchased Endurance by paying approximately $683 million in cash, securities and other consideration, and assuming liabilites of approximately $459 million resulting in a total value of approximately $1.14 billion.  Based on calendar 2011 results, this works out to roughly 6.0x revenue and 12.2x EBITDA.   (One note of caution: Using trailing twelve-month revenues/EBITDA may produce higher multiples than the actual multiples the transaction was completed at as Endurance is a rapidly growing company and the purchasers would have based the valuation on the revenues and EBITDA of the company at the time of the purchase.)

        The second transaction was Endurance's purchase of Hostgator on July 13, 2012. Endurance paid approximately $300 million in cash and assumed liabilites of approximately $21.8 million resulting in a total value of approximately $321.6 million.  Annualizing Hostgators results for the first 6.5 months of 2012, results in multiples of roughly 2.4x revenue and 7.5x EBITDA. 

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.