Very few want to buy a company for reasons you already laid out. I also
found from a different corporate sale that if they buy the company they
seem to discount the price about 25 to 30%. looking at it both ways it
didn't seem to make much difference.
On Sat, Aug 22, 2020 at 2:12 PM Chuck McCown <ch...@wbmfg.com> wrote:
> Depends on whether you are buying the whole company or just the subs and
> useful infrastructure.
>
> Sent from my iPhone
>
> On Aug 22, 2020, at 1:09 PM, Ken Hohhof <af...@kwisp.com> wrote:
>
>
>
> If they thought it would be like the consolidation of the cable TV
> franchises, you were paying a multiple of revenue. But cable companies
> typically don’t compete with each other, you are getting essentially a
> local monopoly, so it’s more realistic to think you are buying customers,
> and will get that revenue for 10+ years. Also don’t typically expect the
> government to pay someone to overbuild you.
>
>
>
> Closest thing today is probably fiber. I don’t think fixed wireless is
> like that, certainly not in unlicensed spectrum. Very little barrier to
> entry. And if your service stinks, the competition will smell blood and
> start direct mail and door-to-door marketing campaigns. I think some even
> have installers following the door knockers offering to hook you up same
> day. Installs can go quick if there’s already a mount and cable you can
> use.
>
>
>
> Sometimes buyers will say they pay more if the subs have all signed term
> contracts, but how long does that last? And if service declines after the
> sale, many customers will say that contract was with the previous company
> not you.
>
>
>
>
>
> *From:* AF <af-boun...@af.afmug.com> *On Behalf Of *Bill Prince
> *Sent:* Saturday, August 22, 2020 1:45 PM
> *To:* AnimalFarm Microwave Users Group <af@af.afmug.com>
> *Subject:* Re: [AFMUG] Buying and selling ISP’s
>
>
>
> Buyers with too much funny money, or I'm missing something. I guess if
> you're coming in as the 800 lb gorilla, you can cut some corners.
>
>
> --
>
> bp
>
> part15sbs{at}gmail{dot}com
>
>
>
>
>
> On Sat, Aug 22, 2020 at 11:41 AM Lewis Bergman <lewis.berg...@gmail.com>
> wrote:
>
> 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
>
>
>
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> ------------------------------
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> --
>
> Lewis Bergman
>
> 325-439-0533 Cell
>
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--
Lewis Bergman
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