Jun 4, 2008 : Web Host HostMySite Acquired

📅 June 4, 2008 - Web hosting provider HostMySite (hostmysite.com 👉 Total Reviews: 10
🙌 Average Rating: 1.9 / 10
👍 Good Reviews: 1
👎 Bad Reviews: 9
👈 Official Responses: 0) reported Wednesday that it had been acquired by Wachovia Capital Partners (wachoviacapitalpartners.com), the private equity arm of the Wachovia Corporation bank.


According to the companies, the deal has been in the works for several months. The investors partnered with hosting veterans Art Zeile and Joel Daly "with a goal of acquiring and building a leading managed hosting company," according to the press release.

Zeile and Daly will become CEO and COO of HostMySite, respectively. Stepping down as CEO of HostMySite is founder Lou Honick, who has led the company since founding it in 1997. He will remain with the company as chief strategy officer.

The financial details of the acquisition were not disclosed. HostMySite currently has more than 250 employees and operates more than 4,000 servers, typically targeting the small to medium-sized business market, which has become one of the hot spots for the hosting business.

Zeile and Daly were founders of Inflow, an IT services company that sold to SunGard Availability Services in 2005. Wachovia Capital Partners was the largest investor in Inflow, according to the acquisition announcement.

"With greater access to financial capital, HostMySite.com will continue as a leader in our industry. We believe that we have great prospects for growth and can further expand our reputation for quality of service, deep expertise, and solid execution," said Honick, quoted in the press release. "We value the breadth of industry experience that Wachovia Capital Partners brings to the table having invested in hosting services companies for over a decade. We believe in this market and our opportunities are significantly enhanced with the backing of a strong financial partner."

HostMySite was advised in the acquisition by DH Captial partners, a company well known for having participated in many significant hosting acquisitions in recent years.

Though it isn't clear from the press release, acquisition, new management blood and the presence of considerable capital have frequently led to further expansion by acquisition in the hosting business, as in the recent case of Layered Technologies, which acquired FastServers a few months after installing new management.

According to Philbert Shih, a senior analyst at Tier 1 Research (t1r.com), Wachovia is planning to work seriously in the dedicated and managed hosting space, beginning with the HostMySite acquisition.

"The buyers were attracted to the customer support culture," said Shih, via email. "Which they plan to make the cornerstore of a push into the SMB dedicated/managed dedicated hosting space, a part of the market that is seeing increasingly intense competition as hosters in the dedicated space look to differentiate themselves from each other and move upmarket to tap into the healthy growth in the managed hosting space."