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
>
> Midwest Internet Exchange
>
> The Brothers WISP
>
>
>
> 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
> --
> 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
