How to sell a hosting client base without losing the customers

Before you talk to anyone: get the book in order

Buyers pay more for a book they can understand, and the work below is worth doing whether or not you end up selling.

• Export a clean account list. Every active hosting account, its plan, its price, its billing period and its next renewal date.
• Cancel the dead weight. Suspended accounts, unpaid accounts and long-abandoned sites make the book look bigger and the churn look worse. Tidy them up.
• Know your churn. Count how many accounts you had twelve months ago and how many of those are still here. That single number will move your price more than anything else you can say.
• List your contracts. Server leases, licences, IP transit, anything with a notice period. A buyer needs to know what you are tied into, and you need to know what you are still paying for after the customers have gone.
• Separate the non-hosting revenue. Design work, consultancy and one-off jobs are yours and do not transfer. Presenting them as recurring revenue will be found out and it damages trust.

Sign the NDA before you send anything

A mutual non-disclosure agreement should be in place before a single customer record leaves your building, and it protects you more than it protects the buyer. Until it is signed, talk in ranges and round numbers: "a few hundred accounts, mostly cPanel, mid four figures a month" tells a serious buyer everything they need to decide whether to continue.

Any buyer who wants your full customer list before signing one is telling you something useful about how they operate.

Do not tell your customers yet

This is the most common and most expensive mistake. Announcing a sale before it is agreed does three things, all bad: it unsettles customers who were perfectly happy, it invites competitors to poach while you have no answer to give, and it weakens your position if the deal changes.

Your staff are a different question, and a harder one. If people work for you, take advice on your obligations early rather than assuming. What transfers, and what that means for employees, depends on the shape of the deal, and it is not something to work out from a blog post.

Agree the awkward things in writing

Deals stall on the same handful of points every time. Settle them before contracts, not during the migration:

• Prepaid annual customers. If somebody paid you for a year in March, the buyer is delivering nine months of service they have not been paid for. Agree who covers that.
• Customers who refuse to move. Some will. Agree what happens to the price if they do, and who tells them what.
• The retention measurement. If your bonus depends on customers staying, agree exactly how retention is counted and over what period, in writing, with an example.
• Support during handover. Who answers tickets on day three? Vagueness here is what customers actually notice.
• Your involvement. How long you stay on, what for, and whether it is paid.

Plan the migration properly

A good buyer runs this and you should expect them to. What you should insist on:

1. Everything is staged and tested on the new platform before any DNS changes.
2. Every site is checked against the original, not just "it loads".
3. Email is treated as seriously as websites. It is the thing customers notice within the hour.
4. The cutover happens out of hours, in batches, not all in one Friday afternoon.
5. There is a rollback plan, and you both know what triggers it.

Ask the buyer how many migrations of this size they have run, and what went wrong on the last one. The answer to the second question tells you far more than the answer to the first.

When you do tell customers, do it yourself

Once the deal is signed and the migration is scheduled, the announcement should come from you, not from the buyer. A message from an unfamiliar company saying "we now run your hosting" reads like a phishing attempt, and a proportion of your customers will treat it as one.

A good announcement is short and does four things:

• Says you are stepping back, and why, briefly and honestly.
• Says who is taking over and why you chose them.
• Tells them what will change, including the bits that do change: who they email, where they log in, what the invoice will look like.
• Tells them what will not change, especially the price.

Do not oversell it. Customers can tell the difference between a considered handover and a press release, and the considered one keeps more of them.

The things that actually cause churn

• Surprise price rises. Nothing loses customers faster than a new owner recovering the purchase price out of renewals. Ask a buyer directly whether they intend to change pricing, and get the answer in writing.
• Silence. A customer who hears nothing for six weeks and then gets an invoice from a company they have never heard of will leave.
• Slower support. If they were used to you answering in ten minutes and the new support takes three days, the price was irrelevant.
• A broken email migration. Websites going down is bad. Losing somebody's email is worse, and it is remembered for years.

If you are winding down rather than selling

You still have options, and simply switching the servers off is the worst of them. Most buyers will take on a client base from an owner who is closing, even where there is little or no money in it, because the accounts are worth having and the customers need somewhere to go. It costs you nothing to ask, and it is a far better ending for people who have paid you for years.

A reasonable timeline

For a straightforward book: a week or two of conversations and an NDA, a week for valuation and terms, a couple of weeks for contracts and legal review, then a migration scheduled around you. Six to eight weeks start to finish is normal. Anyone promising it in days is skipping something you will later wish they had not.

If you are thinking about it, our acquisitions page sets out what we look for, how we value a book and how the handover runs. Nothing goes any further than a conversation until you want it to. And if the problem is the servers rather than the customers, Agency Partner is the way to keep the book and hand us the hosting.