When we sold to JAB they would put the amount in whatever terms you wanted it in. If you wanted to talk EBITDA, they would. If you wanted to talk gross, they would. The number was always the same, they just made their method fit your expectations. I got to know Jeff a little bit and from what I gathered they normally thought about it internally as gross revenue multiples. They were going to tear your business apart anyway so the expense side of things, other than assumed obligations, didn't make much difference to them.
On Sat, Aug 22, 2020 at 1:04 PM Ken Hohhof <af...@kwisp.com> wrote: > Any WISP that has been around for 10+ years has probably expensed or > depreciated several times as much equipment as is currently active in their > network. > > > > Do you have to identify which expensed or depreciated equipment is still > in use and which went in the dumpster years ago? And how do they determine > what the sale price is for the purpose of seeing if it exceeds the > depreciated cost? Do they assume the entire sale price of the business was > to acquire equipment? > > > > Seems like you would be taxed twice, first for capital gains, then for the > expenses you used to offset revenue for tax purposes. > > > > I know most buyers prefer an asset sale to a stock sale, in case there are > ghosts in the closets. But would a stock sale avoid this problem? Does it > matter C Corp, S Corp or LLC? > > > > > > *From:* AF <af-boun...@af.afmug.com> *On Behalf Of *ch...@wbmfg.com > *Sent:* Saturday, August 22, 2020 10:51 AM > *To:* 'AnimalFarm Microwave Users Group' <af@af.afmug.com> > *Subject:* Re: [AFMUG] Buying and selling ISP’s > > > > One concept that was new to me in my sale was depreciation recapture. If > you fully expense or 179 expense or if your equipment is old enough to have > fully depreciated, all the depreciation expense comes back to bite you in > the ass. You will be taxed on it. > > > > *From:* Ken Hohhof > > *Sent:* Saturday, August 22, 2020 9:39 AM > > *To:* 'AnimalFarm Microwave Users Group' > > *Subject:* Re: [AFMUG] Buying and selling ISP’s > > > > That is very dependent on whether the business is being run as “milking > the cash cow” or “reinvesting to grow the business”. Especially since > section 179 allows a lot of capital purchases to be expensed in the first > year. > > > > I suspect many WISP owners prefer to add staff and equipment and towers > and customers, rather than declare profits and pay taxes. That doesn’t > mean their businesses are worth less to a buyer. Back when I worked for > corporate America, I remember around 1990 working for a public high tech > company and at stockholder meetings the CEO would be asked why the company > at every earnings statement would just break even or a little more. He > would answer they were in business to grow, not to pay taxes. > > > > I am sometimes puzzled by competitors who seem to have crappy service, are > hated by their customers, and have high churn. Then I realize they are > milking the cash cow, spending as little as possible, and probably making > as much or more profit as I am. In the case of big, crappy companies, they > probably don’t sweat the churn because there are millions more suckers out > there, you just need advertising to rope some of them in to replace the > cancellations. Like when asked about Frontier, I describe them as the slum > landlord of phone companies. > > > > > > *From:* AF <af-boun...@af.afmug.com> *On Behalf Of *Chuck McCown > *Sent:* Saturday, August 22, 2020 10:02 AM > *To:* AnimalFarm Microwave Users Group <af@af.afmug.com> > *Subject:* Re: [AFMUG] Buying and selling ISP’s > > > > Whatever 5x your earnings are. Not sales or revenue or gross profit but > bottom line earnings on your income statement/ pl. Your taxable income. > > Sent from my iPhone > > > > On Aug 22, 2020, at 8:16 AM, Mike Hammett <af...@ics-il.net> wrote: > > > > What does the revenue multiplier end up being, though? > > 5x EBIDTA / revenue gets you what, in purchases that have been made? > > > > ----- > Mike Hammett > Intelligent Computing Solutions <http://www.ics-il.com/> > <https://www.facebook.com/ICSIL> > <https://plus.google.com/+IntelligentComputingSolutionsDeKalb> > <https://www.linkedin.com/company/intelligent-computing-solutions> > <https://twitter.com/ICSIL> > Midwest Internet Exchange <http://www.midwest-ix.com/> > <https://www.facebook.com/mdwestix> > <https://www.linkedin.com/company/midwest-internet-exchange> > <https://twitter.com/mdwestix> > The Brothers WISP <http://www.thebrotherswisp.com/> > <https://www.facebook.com/thebrotherswisp> > > > <https://www.youtube.com/channel/UCXSdfxQv7SpoRQYNyLwntZg> > ------------------------------ > > *From: *"Chuck McCown" <ch...@wbmfg.com> > *To: *"AnimalFarm Microwave Users Group" <af@af.afmug.com> > *Sent: *Friday, August 21, 2020 8:20:47 PM > *Subject: *Re: [AFMUG] Buying and selling ISP’s > > 5 x ebidta > > Revenue multiples are of no value. > > Sent from my iPhone > > > > On Aug 21, 2020, at 5:30 PM, cjwstudios <cjwstud...@gmail.com> wrote: > > > > 1x annual revenue and hope the customers stay on > > > > On Fri, Aug 21, 2020 at 5:43 PM Matt Hoppes < > mattli...@rivervalleyinternet.net> wrote: > > This is the issue I’ve always had when I’ve looked at buying an ISP. It > always seems like a lot more money I would have to put out to buy then I > could just build and take the customers if something is wrong with the > current network. > > > > > On Aug 21, 2020, at 12:43 PM, Seth Mattinen <se...@rollernet.us> wrote: > > > > > > On 8/20/20 8:13 PM, Steve Jones wrote: > > >> I think you either buy or sell, isp isnt really a flip thing > > > > > > > > > There is/was someone in my part of the country buying up ISPs and trying > to package them all together as a flip. My ISP customers tell me it's far > easier to get the flipper's customers to cancel and switch than buy their > company. > > > > > > -- > > > AF mailing list > > > AF@af.afmug.com > > > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > > > -- > > AF mailing list > > AF@af.afmug.com > > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > -- > AF mailing list > AF@af.afmug.com > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > > -- > AF mailing list > AF@af.afmug.com > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > > > -- > AF mailing list > AF@af.afmug.com > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > ------------------------------ > > -- > AF mailing list > AF@af.afmug.com > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > -- > AF mailing list > AF@af.afmug.com > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > -- Lewis Bergman 325-439-0533 Cell
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