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View Full Version : Looking to buy out DirectAdmin hosts/resellers



retroweb
04-13-2004, 07:44 AM
We're looking to buy clients from hosts using DirectAdmin, in the region of 4-50 clients per company.

If you're a reseller or host looking to close your company, this may be for you. Please email us at matt(at)retroweb.net (matt@retroweb.net) with your proposals.

Kind Regards,
RetroWeb.net

rumrugby
04-26-2004, 06:45 PM
sorry to say but "buying" clients is illegal in some countries,

the users must actually sign up ... :)

good luck

nobaloney
04-28-2004, 02:10 PM
Really, Justin?

Could you name some of those countries?

We've bought and sold client bases in the U.S. since 1995.

Anyone who buys a hosting company, an ISP, or any service related company, is in fact buying a customer base.

Jeff

DJ_Max
05-10-2004, 05:45 PM
Well, I know for a fact that in the US it's legal, not for sure in other countries. I would guess as long as it doesn't violate the TOS.

nobaloney
05-10-2004, 06:50 PM
I don't know of any country in which it's not legal. Since the client base is the only value a hosting company has, it would mean the company has no value at all.

Jeff

blacknight
05-27-2004, 12:08 PM
We've taken over other hosts in Ireland and never had this issue. If the host goes out of business or plans to leave "the game" then there should not be an issue, as long as they inform the clients of the change

ServerCircle
06-05-2004, 04:49 AM
The client base isn't the only value a hosting company has. Its reputation is a huge value, and some hosts own and maintain their own equipment which is usually of high value.

rumrugby
06-05-2004, 04:37 PM
well for example in australia you are allowed to buy a company which already has clients however it is against the law to buy customers from one hosting company and then use them on another, the user must be informed of the decision which is a breach of contract and therefore a new contract must be drawn and signed by both parties. I am sure that regardless of this fact many host are doing this however i believe it is very poor form to buy customers, customers do not appreciate being moved around just at the profit of the company. I would never do this; all my customers have signed up with me directly. ;)

nobaloney
06-06-2004, 11:46 AM
Originally posted by ServerCircle
The client base isn't the only value a hosting company has. Its reputation is a huge value,
Yes, but that's additional to the customers. If you're buying a hosting company with just the name/reputation, but none of the customers (meaning you'd have to go out and get new customers from scratch), I don't know about you, but I don't see much value in that. Unless of course it's MSN or Earthlink :) .

and some hosts own and maintain their own equipment which is usually of high value.
Change that to sometimes of high value and I'd probably agree with you.

But again, I can't see buying the hardware without the customers to put it on.

In looking at buying and selling customers over the years, I've never seen a deal where the equipment changed the price in any way. In fact I've never seen a deal (though you may have) where the buyer wanted the equipment.

I once bought an ISP (and it's users) that came with a server that was in continuous use for five years. We weren't buying the building, though, so we had to move the hardware.

Which meant downtime.

To avoid downtime we set up a new server in our colocation facility, and transitioned all the clients and services to the new server.

Once the new server was running everything for everyone (about a week) we took posession of the five-year-old server, but we never turned it on again.

Do you want it :) ?

It's heavy.

Jeff

nobaloney
06-06-2004, 11:58 AM
Originally posted by rumrugby
however it is against the law to buy customers from one hosting company and then use them on another, the user must be informed of the decision which is a breach of contract and therefore a new contract must be drawn and signed by both parties.
Your points bring up two questions of my own:

1) Are you saying that Australia law forbids assignment of contract rights? I find that a bit hard to believe; it would make Australian law very different from English common law (from which it, as well as US common law, descends). Or are you saying that your contract doesn't include assignment rights and Australian law doesn't allow assignment in the absent of such rights in the contract? (I'd still find the latter hard to believe, as it's in English common law.)

2) Does Australia law require all contracts to be in writing and signed, rather than any kind of implied contract, such as any contrct entered into on a website? If Australia law forbids implied contract, then you can't do eCommerce in Australia.

I believe it is very poor form to buy customers, customers do not appreciate being moved around just at the profit of the company.
People do things in poor form all the time. Companies, with a profit motive, do it quite often.

Does Australia law, then, forbid me from buying only certain customers of a company? If so, then that really depreciates the value of your company when you try to sell it.

For example, if you've got 100 profitable clients making you $1 per month per client and 100 unprofitable clients losing you $1 per month per client, and if your sale price is based on the yearly profit from your company, then you can either sell me the 100 profitable clients and make $1200, or you can sell me all 200 clients, and make $0.

Again, I find it hard to believe Australia law limits business in such a fashion. If it does, then your Australian based business is quite limited compared to my U.S. based business, and again, whether or not any of this is in good form, as you put it.

I would never do this; all my customers have signed up with me directly. ;)
I've learned to never say never. For example, if you were to come down with a serious illness and your physician said you couldn't work any longer, would you just close your business, or would you try to sell it, to obtain some income for you, and some easy continuation path for your customers?

Perhaps you don't think about business continuation in the case of a catastrophe, but we do, and in fact our customers do. Many of them ask them what happens if something should happen to me.

In fact we have a plan in place, bought and paid for, so that if anything should happen to me, the business will continue until such time as it's transferred over to another (predefined) company.

Jeff

k9Wolf
07-06-2004, 04:22 AM
Buying clients? I’m no expert on contract law, but I always believed that a business offered goods or services and those customers engaged / purchased those goods or services.

As a business, I would feel very insecure in purchasing someone else’s customers as no implied contract existed between my business and the customer. This would mean the customer is under no obligation to maintain services with the “new” business. The “new” business would have to re-sign the customers to ensure some form of contractual obligation exists.

If the new incumbent is purchasing the business as an ongoing operation then existing customer contracts can be maintained. The fly in the ointment in some cases (dependant on individual country trading laws) arises in the form of “Foreign Ownership” and or “Privacy Laws”.

An example of this (relative to Australia) would be the issue of AAPT Australia being purchased by Telecom New Zealand (TNZ). AAPT had previously purchased a smaller ISP (Connect.com.au). When Telecom New Zealand purchased AAPT Australia, TNZ wanted to undertake an amalgamation of the existing enterprise infrastructure (including customer information). This was quickly knocked on the head due to privacy laws.

Dissemination of Connect.com.au’s customer details to AAPT was fine as Conenct.com.au was now a subsidiary of AAPT. The AAPT / TNZ relationship though was a different matter as it fell under the Foreign Ownership Laws. Australian Privacy laws prohibited the transfer of customer information unless consent is given or implied by the customer. (Implied could mean the customer was notified within a reasonable timeframe and failure to dispute/reply was not undertaken by the customer within the given timeframe.)

The only benefit I can see for a business purchasing another businesses client base is if the purchasing business views the exercise as a form of paid targeted marketing. Not too dissimilar to purchasing a mailing list targeted to a specific industry. Most people do not like change and the purchasing business is really gambling on this fact. They would be hoping the client could not be bothered going through the effort of leaving them and going to another supplier. I for one would find this a risky gamble though.
:confused:

matrixx
07-06-2004, 06:02 AM
I'm the same as Jeff, sad to say if I got hit by a bus things would tickle along nicely without me - hey maybe even better ;)

But as for buying other hosting companies customers - we'd do it although in practice we never have.

I'm sure if the sale / change was managed properly it would be alot better for the users if their site was transferred with a little but minimum hassle and they would prefer that scenario to the host just switching the servers off, saying sorry and just walking away.

Rob

nobaloney
07-06-2004, 09:29 AM
I've looked over these posts again (though I don't really know why :rolleyes: ).

I just recalled a situation where we (a company of which I was 10% owner) was trying to buy another company to merge into ours.

They had about 2,000 clients and wanted (if I recall correctly, somewhere in the area of us$250,000.

I was carrying on the negotiations and when I asked them if that included the equipment their response was that sure, I could have it if I wanted it.

So the equipment had no value at all; the value was in the client base.

Is there anyone reading this thread that could find out definitively if Australia and New Zealand both forbid company mergers? I'd highly doubt that, and yet the posts of two members here indicate they both do.

I can't see any company having much value if the laws of the country where it's located forbid mergers.

Jeff

k9Wolf
07-06-2004, 05:44 PM
Hi Jeff,

Perhaps you misinterpreted my post or I was not clear.

Company mergers are permissable in Australia. (No doubt they are also permissable in New Zealand).

The distinction I was trying to make was the difference between buying a business as opposed to buying a businesses customer base or customer contracts.

Foreign ownership laws only come into play when those two businesses ar not located in the same country.

Consumer laws and Privacy laws govern and protect the customer. Contract Law covers all parties engaged in the contract. Consumer, Privacy & Contract Law can only legally govern in the country of origon.

Meet the legal requirements for Contract Law, Consumer Law, Foreign Investment and Privacy Laws and no doubt most forms of business sales, mergers and or aquisitions would be feasable or possible.

As for the information relating to the above, I have included the following url. http://www.australia.gov.au/

The Homepage contains a special section relating to condusting business in Australia.

Info for New Zealand can be found via the following link: http://www.govt.nz/en/search/topics-top/

Hope that helps.

Regards,
Rohan