Selling your hosting company in Italy

Selling your hosting company in Italy

If you are looking to sell your hosting business in Italy, CFIE can help you. Our network of M&A advisors have a deep expertise of the Italian hosting industry and can help you devise the best possible strategy to sell your business.

The sale of a business is a complex process and it is fundamental to know all the different steps to make sure the process runs smoothly and you get the most appropriate valuation for your hosting company. CFIE can assist you in all the different stages including legal and tax aspects.

We can help you find the best suited buyer, both domestic and international, and we will guide you in the full sale process. Please get in touch to learn more about selling a hosting company in Italy.

The hosting industry in Italy

As in the rest of Europe, the hosting industry in Italy shows interesting growth opportunities. Companies have been producing an ever increasing amount of digital data (driven by the increasing internet traffic, cloud computing adoption and IoT - internet of things) and the sector is becoming increasingly complex which requires an increasingly complex ecosystem to store and process this large amount of data. Companies have been, therefore, turning to specialized hosting companies in order to streamline their IT operations and have more efficient and effective solutions.

Unlike the rest of Europe (particularly Northern Europe) however, the Italian hosting market is characterized by the presence of a multitude of SMEs. Alongside global players (such as Microsoft Azure, Google and Amazon Web Services) and Italian hosting companies with a global footprint (such as Aruba, Dada, KPNQwest Italia and Seeweb) it is the presence of small companies which makes up most of the Italian hosting market which mainly serve small and medium businesses.

Essential features to compete

The Italian hosting industry is becoming increasingly competitive which will require companies to consolidate to better achieve growth and satisfy investment needs. The increasing complexity of the hosting industry (increasing data production, use of multiple operating systems, plethora of back-end and front-end software applications, need of high data processing speed) will push hosting companies to undertake investments in order to sustain this increase in complexity. Investments will be necessary in order to improve their operations in order to provide:

  • Maximum security level, both physical security of data centres where servers are stored (i.e. access control, surveillance and fire protection systems) and security of data (back-up services)
  • High data access speed which will require high bandwidth connection (to guarantee high data transfer capacity) and low latency (the time response of servers)
  • High level of availability of hosting services which will require a low downtime (periods when servers are not accessible)

Types of hosting services

The Italian hosting market shows similarities with the rest of Europe regarding the main solutions provided. The market can be segmented on the basis of how hosting solutions are delivered to clients:

  • Co-location hosting: providers offer datacentres facilities services such as physical space, power, cooling, and network connectivity.
  • Shared hosting: a single server is shared among different users. Each user is allocated with a certain amount of CPU, memory, storage and bandwidth. In this case, users have a limited control on servers. Operating system and software applications are the same for all users of that server.
  • Dedicated hosting: the server is not shared. The user has full control of the entire environment (software and hardware). The user can install specific operating systems and software applications.
  • Managed dedicated hosting: it is a dedicated hosting with additional solutions provided such as security updates, virus scanning and additional services.
  • Virtual hosting (Virtual Private Server - VPS): similar to shared hosting but with more control on the server (e.g. with root or administrative access)
  • Cloud hosting: storage and software applications are delivered as a service over the internet (i.e. on demand).
  • Reseller hosting: companies sell hosting solutions to other companies which in turn sell them to their users (in this case hosting companies operate as wholesalers).

Why to sell your hosting business?

The increasing competition within the hosting industry will require businesses to scale in order to reduce average costs and invest in growth. Hosting companies may find more efficient and less risky to buy established companies with operations already in place and an existing client base.

You may then maximize the value of your company selling it to potential buyers that are willing to invest in order to:

  • Expand client base
  • Increase storage capacity
  • Expand geographic footprint: e.g. to increase geographic redundancy (for back-up purposes), to enter a new country/legislation, and/or to be closer to clients in order to reduce network latency (to increase the level of availability)
  • Increase network redundancy (i.e. acquiring hosting companies which have relationships with different telecom and internet carriers)
  • Acquire particular technological expertise (e.g. expertise in a specific hardware, operating system and/or software application)
  • Reach economies of scale: the hosting industry is characterized by high fixed costs and acquisitions may help hosting companies to reduce average costs of their operations and increase buying power with suppliers
In addition to horizontal acquisitions, M&A transactions in the hosting industry may be spurred by vertical integration such as by ISP providers and telecommunication carriers that want to offer integrated solutions.

The high potential growth of the Italian hosting sector may draw the attention of private equity firms as well, which may show particular interest for established companies with high scalability and recurring revenues.

Selling an Italian hosting business

Please get in touch with us to learn more about selling a hosting company in Italy. The advisors of CFIE can help you to sell your hosting company in Italy and will assist you in every step of the selling process.