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.
>>
>> >
>>
>> > --
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>>
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>
>
> --
> Lewis Bergman
> 325-439-0533 Cell
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