Consolidation in the European hosting market continues

Robust growth is 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 will 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, which is boosting valuations. They are attracted to hosting companies’ recurring revenue streams, high margins and also their expansion potential.

There are plenty of exciting opportunities for sellers. Smaller hosting players are advised to either build scale, or consider selling their businesses to larger companies given the current market dynamics.

We published a new report on the European hosting market. Key conclusions from the report include:

  • Size and global presence are needed to attract large customers and/or build a strong brand.
  • Building 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 positive correlation between the size of the target and the multiple a buyer is willing to pay for that target.
  • Commoditisation of the hosting industry leads to diversification acquisition strategies
  • PE firms generally execute larger transactions and tend to pay higher multiples for transactions.

If you would like to receive a copy of the report, please send a mail to info@capitalmind.com or send me a direct message.

Ron Belt
Ron Belt
Managing Partner
Benelux

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