Carpathia to play up fed angle

Contact: Scott Denne Michael Levy

Carpathia Hosting will again test the market’s appetite by putting itself in play by the end of the year. The colocation and managed services provider has been a consistent target of deal rumors since Spire Capital Partners, its owner since 2008, set out to raise its third private equity fund around the start of last year.

We understand that Carpathia made earlier approaches to potential buyers a year or two ago but felt that the market wasn’t properly recognizing the value of some recently developed, underutilized datacenter space. The company’s 2014 revenue is likely to near $100m and it could fetch $200-250m in a sale, given that the median TTM revenue multiple for vendors in this space for the past two years is 2x, according to the 451 M&A KnowledgeBase.

Carpathia has 10 datacenters in three different US markets with a healthy utilization rate of 76%, according to the 451 Datacenter KnowledgeBase , which makes it an attractive target. The company’s most compelling value, however, is its footprint with the federal government. Though it’s too small to handle large physical deployments from the federal government on its own, Carpathia meets compliance needs and has the experience that would be valuable to larger players chasing federal business, such as CenturyLink, QTS Realty Trust and Verizon Terremark.

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