Hosting and Managed Services Introduction

Market Commentary 

  • Significant consolidation and investment activity across managed hosting and services with more than 10 significant transactions in the past six months
  • Market opportunity continues to be significant as SMBs turn to third party vendors to manage their cloud and IT environments given the significant scalability and cost efficiencies they provide
  • Growth in webhosting services supported by a confluence of secular trends including the mission critical nature of having an online presence and the adoption of easy to use and low cost cloud-based website creation and hosting
  • As businesses and consumers increasingly embrace the digital economy, data usage will only increase, supporting growth for data centers – Read a report published by Harris Williams’ Industrials team

Hosting and Managed Services Taxonomy

Web Hosting

Refers to a service in which a vendor offers the housing of business-to-business or business-to-consumer eCommerce websites via vendor-owned shared or dedicated servers and applications for enterprises at the provider-controlled facilities

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Managed Services

Refers to the delivery of network, application, system and e-management services across a network to multiple enterprises, using a “pay as you go” pricing model

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IT Outsourcing

Refers to the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes

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Selected Recent HW Hosting and Managed Services Transactions 

screen_shot_2018-11-05_at_12.52.10_pm.pngProvider of services allowing SMEs to move their IT infrastructure and operations into the cloud, as well as providing end user support and consulting as part of a full-service IT offering

 

 

 

screen_shot_2018-11-05_at_12.53.09_pm.pngProvider of web domains, shared web hosting and value-added services with leading positions in Sweden and the Czech Republic, and presence in Norway, Serbia, Slovakia, Spain, Netherlands, Germany and the UK

 

 

 

screen_shot_2018-11-05_at_12.53.51_pm.pngProvider of managed technology services with national scale in the US and the capability to design, deploy and support technology solutions from cable to cloud

 

 

 

screen_shot_2018-11-05_at_12.54.31_pm.pngProvider of SME focused hosting and cloud solutions, including domains website hosting, email for smaller customers and managed servers and applications for larger customers

 

 

 

screen_shot_2018-11-05_at_12.55.13_pm.pngProvider of managed hosting and cloud solutions specialised in managed cloud hosting, desktop-as-a-service, security and connectivity

Market Observations

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Note: (1) Group weighted average stock price performance over the past year based on market capitalisations; Sources: Factset; market data as of 30 September 2018, Gartner, broker notes, company websites

Select Hosting and Managed Services M&A Transactions

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1&1 Internet's Acquisition of World4You

  • Austrian provider of webhosting services
  • With over 100,000 customers and more than 250,000 domains, the Company is the market leader for webhosting in Austria
  • World4You will remain independent and will enhance 1&1’s European hosting and cloud application business, further solidifying its market position in Austria

 

Orhms2.jpgange's Acquisition of Basefarm 

  • Norway-based provider of cloud computing services for the enterprise sector
  • Basefarm has a strong operational presence in several European countries, particularly in Norway, Sweden, the Netherlands, Austria and in Germany
  • This acquisition is set to reinforce Orange Business Services’ position as a significant player in the European cloud computing services market

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Abry Partners' Acquisition of Donuts 

  • US-based domain registrar holding the world's largest portfolio of new top-level domains (TLDs)
  • Donuts provides its registrar / reseller customers with innovative services for the discovery, registration, usage and monetization of high-quality domain names​
  • The financial resources provided by Abry Partners will help Donuts to accelerate its growth and innovation

     

TransIP's Acquisition of IT-Ernity​hms4.jpg

  • Netherlands-based provider of business-critical managed services and shared hosting for SMEs
  • IT-Ernity offers a portfolio of standardized fully-managed solutions as well as shared hosting, domain registration and secure infrastructure connectivity through xDSL and fiber
  • The combined entity will create a new market leader with 1.2 million domain names

 

screen_shot_2018-11-05_at_1.25.01_pm.pngAltos' Acquisition of Syntel 

  • US-based provider of information technology and business process outsourcing services
  • Syntel will significantly strengthen Atos’ Business & Platform Solutions Division worldwide with its delivery platform generating some of the highest margins in the industry
  • This transaction expands Atos’s capabilities in North America to provide end-to-end services to US customers as well as strongly reinforcing its Banking, Finance & Insurance verticals 

Sources: MergerMarket, companies’ press releases, HW proprietary information

IT & Tech-Enabled Services - Trading Comparables

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Sources: MergerMarket, companies’ press releases, HW proprietary information

IT & Tech-Enabled Services - Transaction Activity

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Note: convertion to USD based on FX rate as of announcement date

IT & Tech-Enabled Services - Landscape

Representative IT & Tech-Enabled Services Providers

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