The hosting industry has experienced strong growth in recent years and is currently valued at more than USD50 billion. Robust growth looks set to continue across all major hosting subsectors over the next few years. Further consolidation is anticipated during this time as larger market participants continue to pursue acquisition opportunities.

High profile hosting and telecom players are likely to drive future sector growth and consolidation as they look to penetrate new market segments and innovations. Private equity (PE) firms are also active in the sector, offering attractive valuations due to hosting companies’ recurring revenue, high margins and expansion potential. This presents exciting opportunities for sellers. Indeed, smaller hosting players are advised to either build more scale or consider selling their businesses to larger companies given current market dynamics.

Key conclusions from this report include:

  • Size and global presence are needed to attract large customers and/or build a strong brand.
     
  • Creating more scale and improving buyers' offerings are key motivations for acquisitions.
     
  • Innovation is key to attracting and retaining customers in private Cloud infrastructures.
     
  • There is a clear trend between the size of the target and the multiple a buyer is willing to pay for that target.
     
  • PE firms generally execute larger transactions and also tend to pay higher multiples for these transactions.

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