Cheval Celebrates Transactions and Growth!
It was all excitement as the this Cheval Capital celebrated 400th transaction! Since the company entered the business in the late 1990’s Hillary and Frank have assisted companies in cloud hosting, and even IAAS businesses navigate the tricky waters of both mergers and acquisitions, corporate finance and financings.
The benchmark which is the 400-transaction also marks the 25th transactions that were successfully closed in the last year! Within the last few months, many operations were completed with companies from various countries including in Ireland, Australia, China, New Zealand, Israel, Canada and the United States.
The wide network and e industry expertise has helped in enabling clients to get maximum value in business regardless of their location.
Hillary Stiff said that during the last years, their company has grown as suppliers struggled with organic expansion and had turned to acquisitions. This acquisition requirement has supported prices and led to an active transaction marketplace.
There are several highlights regarding observations about the hosting, cloud and related business markets.
SMB hosting/cloud business is a market of siloed mass-market-products: Though this isn’t new, it’s intriguing to people that such a massive proportion of the SMB providers in the hosting/ cloud space are businesses offering a restricted set of products/services to a mass-market, frequently commoditized basis. This kind of focus on a limited product/service set is very good for many reasons, but it may also cause problems, especially when market expansion slows because of maturation or challenges of competition from substitutes.
What happens when growth slows down? As market expansion slow down in many industry segments, the limited product/service set providers in those segments have witnessed their growth slow together with it. Providers who were growing more slowly than the industry face lots of challenges in replacing standard attrition, and a few have begun to shrink.
Options: Service suppliers in such slow expansion segments are pursuing one or more of several paths;.
o Utilizing sales and marketing to take customers from competitors.
o Expanding the range of products/services which are either closely related or possess related customer bases.
o Abandoning customer development as a target and running the company to maximize the money flow from these clients (possibly for distribution to owners or for growth into unrelated companies).
o Employing M&A to obtain clients or exit the business enterprise.
It seems larger suppliers pursue several of those options concurrently. On the other hand, the small to average -sized providers typically tend to focus on one or a maximum of two.
Even though a couple of suppliers that may take away customers from the others and go on growing in these mature sections, it can be hard for many suppliers unless they offer new, high expansion products or solutions. Therefore, providers in these segments are expected to diversify into providing a wider range of products/services with related client bases, or go for M&A to acquire customers or leave business.