Green Olive Tree Acquires ZebraHost for $1.1 Million, Nearly Doubling in Size

Not every instructive hosting deal is a billion-dollar roll-up. Green Olive Tree, a veteran-owned managed-hosting provider, has bought ZebraHost LLC, a cloud and colocation provider founded in 2000, for $1.1 million, a deal its president, Jon Berry, says nearly doubles the company’s revenue. It closed on June 22. And it is a cleaner look at how consolidation actually works at the bottom of the market than the mega-deals: a founder in his seventies looking for an exit, a six-year courtship, and a slightly larger operator ready to catch the business.

The Deal

Green Olive Tree says ZebraHost brings roughly $1.2 million in annual sales, around 230 active client companies and about 400 cloud servers, set against Green Olive Tree’s own revenue of about $1.5 million. The $1.1 million price works out to just under one times ZebraHost’s annual revenue, a modest multiple that reflects the economics of small, service-heavy hosting businesses. On the metric Berry says he weighed most heavily, cash flow, the deal came in at about 2.7 times. A letter of intent was signed in February, and the deal closed on June 22. The acquired entity is ZebraHost LLC; for the deal’s structure, Berry formed a new LLC with the identical name in a different state. It was, he said, his first acquisition of this size, and the valuation was the part he found most instructive, leaning on a local Small Business Development Center to arrive at a fair number before working out the financing and terms. The figures here are Green Olive Tree’s own; ZebraHost was not separately interviewed for this article.

A Six-Year Courtship and a Retiring Founder

The deal was years in the making. Berry and ZebraHost’s Clive Swanepoel first discussed a transaction about six years ago but could not agree on terms. Swanepoel came back around two years ago, initially asking Green Olive Tree to take over all support and infrastructure management for his company. At 76 and close to retirement, the conversation soon turned back to an outright sale. That backstory is the real texture of small-hosting M&A: these are less strategic land-grabs than succession events. ZebraHost had been independently owned since it was founded in Des Moines, Iowa, in 2000, and an operator that has run on its own that long needs a home for its business and customers, not a wind-down.

What Green Olive Tree Gains

Scale is the obvious part. The less obvious part is what ZebraHost does that Green Olive Tree did not. ZebraHost runs eight data center locations and markets HIPAA, HITRUST and PCI-certified facilities, and while Green Olive Tree says it already served the same regulated customers, the acquisition brings new data center relationships and, more consequentially, a new line of business: a good portion of ZebraHost’s business is company-owned hardware and colocation leasing, a model Green Olive Tree had not run before. “I’m glad to be getting into that,” Berry said.

For customers, little changes immediately. ZebraHost will keep operating as a standalone company under its own brand for the foreseeable future, and while its billing is being migrated from HostBill to WHMCS, the two companies’ systems will stay separate, with no plan to merge them.

The Signal for the Small End of Hosting

Green Olive Tree does not expect another deal this size soon, but it typically closes one or two much smaller acquisitions a year, and Berry says that pipeline is not drying up. Much of Green Olive Tree’s own client base is smaller hosts, and a growing number of them are looking for exits. That is the quiet counterpart to the headline consolidation among the giants: while the largest groups roll up mid-market brands, a layer of micro-acquisitions is knitting together the smallest hosts, one retiring founder at a time. The economics are humbler, a business bought for roughly its annual revenue, kept under its own name, its customers left in place, but the direction is the same. The number of independent hosting companies keeps falling, and deals like this are how.

About the Data

The deal terms, financial figures and timeline in this article, including the $1.1 million price, ZebraHost’s approximately $1.2 million in sales, 230 clients and 400 cloud servers, and Green Olive Tree’s roughly $1.5 million in revenue, were provided directly by Green Olive Tree president Jon Berry and are as reported by the acquirer. Company profiles, service lines, data center locations and certifications are drawn from Green Olive Tree’s and ZebraHost’s official websites.