I mean, its nice from a network operator aspect if they have solid tech, but money people usually only look at revenue, and probably don’t really know what those white things hanging on a tower are, or how many things tied to a utility pole is a good number. There’s lots of companies that spend a year fattening up the revenue by hollowing out the core, heck that’s the playbook for Wall Street M&A. Dump a bunch of employees and look for the next sucker to buy a hollowed out company. Sure, it hollows out the soul of the industry and eventuallly the country en masse, but that’s some other guys’ problem.
> On Dec 16, 2024, at 7:28 AM, Mike Hammett <af...@ics-il.net> wrote: > > *nods* and a diligent buyer should look at trends over a few years. Did capex > or payroll inexplicably drop a year or so before the sale? That should be > part of things that you plan for before your offer. "Hey, I saw that you're > running half of your backhauls hot *and* you haven't bought any for two > years. I'm gonna knock that off the purchase because you likely set this up." > Obviously, more delicately than that. > > I've also told my money people that when doing acquisitions, they need to > plan some percentage of the purchase price to be spent in the first 90 days, > 180 days, etc. improving things. I've heard so much about botched > acquisitions because of the lack of attention to the network during the > transition time (Rise was like 2+ years out at one point) that by the time > they were done with the integration, their purchase was only a shell of its > former self. Maybe you need to buy some more backhauls, more APs, maybe you > need to implement QoE, etc. Part of my strategy is also more dark fiber > deeper in the network. Trade opex for capex. One network I was looking at was > spending like $6k/month on DIA. I would have spent less than $6k/month on a > pair of glass from Cermak through their network to the rest of our network > and then I'd have nearly infinite capacity able to be dropped in more places > in their network for resiliency and capacity. > > > I guess conversely to cutting spending to make the financials look better, > also look for expansions that were done "cheaply" and with little support to > make themselves look bigger for the acquisition. That's exactly what T6 did > when they expanded through our area before selling to JAB. To really be able > to capitalize on those hasty expansions, you'll have to swap omnis for > sectors, cheap radios for better radios, do the marketing that they hadn't > yet done, etc. > > > > ----- > 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: "Ken Hohhof" <khoh...@kwom.com> > To: "AnimalFarm Microwave Users Group" <af@af.afmug.com> > Sent: Monday, December 16, 2024 9:07:56 AM > Subject: Re: [AFMUG] KBB for multiples? > > Oh, one other random thought. Some years ago there was a change in tax > treatment for capital gains, I forget the details, but anyone thinking of > selling their business wanted to do it before the change. And various > consultants and people on the news radio business report telling you how to > stage your business for sale. Basically, how to inflate the EBITDA. > > Accelerate revenue, but mainly cut costs. Fire people, stop doing > maintenance and equipment upgrades, stuff like that. Usually that doesn’t > bite you in the ass immediately, but it can make current year EBITDA look > better. > > So something to watch out for. In the situation you describe, probably not a > factor. > > From: AF <af-boun...@af.afmug.com> On Behalf Of Dev > Sent: Sunday, December 15, 2024 11:51 PM > To: AnimalFarm Microwave Users Group <af@af.afmug.com> > Subject: Re: [AFMUG] KBB for multiples? > > This also got me thinking: > > Who is the buyer and seller? Or really, why the sale is taking place. I’ll > start. > > Seller got injured, unlikely to return to climbing towers. This in parallel > with a focus on a sister business that’s more exciting in their current > situation, and is capturing their attention to the detriment of [W]ISP. > > Buyer can more reasonably coordinate frequencies and technologies and there’s > a decent mesh. Buyer looking at what is the ‘amplifying’ effect of having a > unified fabric across a service area, more POP’s, easier to backfill in order > to concentrate on specific projects, like fiber to an MDU or some such. Buyer > doesn’t have to upgrade much or any of their systems to onboard Seller’s > customers, just helps scale. > > And then there’s the due diligence, I feel like in some ways we’re shinging a > bright light into their closets, which feels overly personal really, but > necessary. “Oh, I’m sure they’ll assign that contract”. Sure. Let’s have a > look at that contract and contact them. Stuff like that. > > > On Dec 15, 2024, at 3:42 PM, Ken Hohhof <khoh...@kwom.com > <mailto:khoh...@kwom.com>> wrote: > > Sorry, I don’t have an answer to your question, but I do have a few thoughts. > > One, I remember long ago taking a business school class that covered M&A, and > it stressed that acquisitions typically happen when the assets are worth more > to the buyer than the seller. Many ways this can happen, like you may have > synergies that lower costs, or additional products and services you can sell > to the customers, or economies of scale, or a way to repurpose assets like > real estate. You may be looking a acquiring a company with low EBITDA but > your existing staff can take over all sales, installation and support and you > won’t need their people. If they have office space, you may not need that. > > Two, at this point in time, I don’t think you can value an ISP (especially a > WISP) without accounting for BEAD but also the new administration. My gut > tells me you need to look short term, especially with a WISP. You are buying > a revenue stream, I would look at revenue or free cashflow over the next 1-2 > years in addition to EBITDA. > > Three, it depends on whether we are talking a cash sale or some sort of > seller financing. Deals are done for something like seller gets X% of the > revenue for Y months. That also allays some fears of overstated customer > count or revenue numbers. If you are willing to pay cash, I would expect the > seller to demand less because he’s probably not going to get a lot of cash > offers. More likely seller financing or stock swap. > > From: AF <af-boun...@af.afmug.com <mailto:af-boun...@af.afmug.com>> On Behalf > Of Mike Hammett > Sent: Sunday, December 15, 2024 2:40 PM > To: AnimalFarm Microwave Users Group <af@af.afmug.com > <mailto:af@af.afmug.com>> > Subject: Re: [AFMUG] KBB for multiples? > > As someone about to be stepping into acquisition mode, I'd like whatever > resources people have in that realm as well. > > Well, I mean even with "straight EBITDA", surely people are still discounting > or adding on attractive or unattractive variables. There are a ton of things > that can affect value that don't show up in financials. > > > > ----- > 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: "Dev" <d...@logicalwebhost.com <mailto:d...@logicalwebhost.com>> > To: AF@af.afmug.com <mailto:AF@af.afmug.com> > Sent: Friday, December 13, 2024 12:03:41 AM > Subject: [AFMUG] KBB for multiples? > > Okay, there’s no such thing as Kelly Blue Book for valuing multiples if > you’re acquiring a [W]ISP, but is there some kind of guidelines, like we’ve > already established a negative multiple for obsolete PMP 320’s, but what are > 450’s worth per sub? What about Tarana G1/G2? Fiber is sort of more knowable. > I guess UBNT is probably pretty low. Someone has to have guidelines/rules of > thumb, in case you choose not to do straight EBITDA. > -- > AF mailing list > AF@af.afmug.com <mailto:AF@af.afmug.com> > http://af.afmug.com/mailman/listinfo/af_af.afmug.com > > -- > AF mailing list > AF@af.afmug.com <mailto: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 <mailto:AF@af.afmug.com> > http://af.afmug.com/mailman/listinfo/af_af.afmug.com
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