Private Investment Firm Littlejohn & Co. Acquires Hostway Corporation

Web Hosting

imageWeb host Hostway Corporation has been acquired by Littlejohn & Co., a Greenwich, CT-based private investment firm whose resources are expected to enhance Hostway’s managed, cloud and web hosting efforts and their promotion.

Hostway already provides hosted IT solutions to more than 500,000 small and medium-size businesses and enterprise customers. As demand for hosted IT solutions continues to grow, Littlejohn will serve as an active shareholder and board of directors, and support Hostway’s efforts to acquire new customers and further differentiate its offerings.

“We are extremely pleased to partner with Littlejohn and gain access to additional resources to help us grow our managed, cloud and web hosting businesses,” Hostway president John Martis said in a statement.

Hostway currently has more than 250,000 square feet of data center space across four continents and 12 countries, and it is one of the largest cloud hosting and IaaS providers in the world.

Littlejohn managing director Michael Kaplan said in a statement, “We look forward to working with Hostway’s management to accelerate growth by continued investment in Hostway’s technology platform, enhancing its sales and marketing efforts and selectively making acquisitions targeted at enhancing the customer experience.”

Over the past few years, private equity firms have shown great interest in large web hosts. In July 2013, Host Europe Group, a company with more than a million customers, was bought by European private equity firm Cinvin for £438 million (or roughly $671 million at the time). And in 2011, web host Go Daddy was bought by KKR & Co., Silver Lake Partners and Technology Crossover Ventures.

With the backing of their private equity partners, many of these hosting companies have, in turn, had greater power to grow through acquisition. For instance, with the help of its backing, Go Daddy was able to make a recent string of purchases including web host Media Temple and domain marketplace Afternic.

In the Hostway transaction, Cowen and Company, LLC acted as exclusive financial advisor to Littlejohn, and DH Capital, LLC acted as exclusive financial advisor to Hostway.