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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 extensive network and industry experience has been of great assistance to their clients by allowing them to get maximum value in their business irrespective of the geographical location.

According to Hillary Stiff, the company has grown even as suppliers have struggled with growth and turning to acquisitions. This acquisition demand has supported prices and resulted in an active industry.

As the year begins, here are a few highlights regarding a hosting company, cloud, and related small business markets.

SMB hosting/cloud business is an industry of mass-market-products: Even though this is not new, it’s interesting how such a massive percentage of those SMB providers from the hosting/cloud area are businesses offering a restricted set of products/services on a mass-market. This concentration on a limited product/service set is terrific for many reasons, but it can be a source of trouble particularly when market expansion slows.

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 market have had trouble replacing normal attrition, and some have started to shrink.

Options: Service suppliers in such slow expansion segments are pursuing one or more of several paths;.

o Utilizing marketing and sales to take away customers from other suppliers.

o Expanding into new and related products/services or the ones with related customer bases.

o Abandoning customer growth as a target and focusing on maximizing the money flow from these customers.

o Employing M&A to obtain clients or exit the business enterprise.

It seems larger suppliers pursue several of those options concurrently. The little to midsize providers usually tend to concentrate on one or two.

While there will be a couple of providers that can take away customers from others and grow but this might not be feasible unless they provide new, exceptional products or solutions. So, such kind of suppliers may opt to diversify into a wider package of Products/services or use M&A to acquire clients or exit.