A seller doesn't necessarilly need to allow the buyer to get an ROI on the
existing revenue that he is buying.
The buyer gets an ROI on the increased revenue (above what the company is
already doing) that he generates after he buys it.
If someone has a network that runs itself, and has clients that are likely
to stay for a long time (for example an underserved area), a seller doesn't
need to sell to get an equivellent of a 4x annual return, he just fires
everyone, and collects the money for the next 4 years. If a business model
is built on not having much reocurring cost to opperate and the revenue is
close to profit, the seller hsa no reason to sell or give up his projected
ROI. The buyer takes the risk of buying because, they know if they inject
money in, they will get much higher revenue than currently exists. So the
buyer is buying potential, of what they can make if they had the time to
market, making money from day one without burn, opporuntity because they
have the WISP's assets. A company that has 5 years left on their leases and
already tapped the market, compared to someone who has it all paid off
already and not began to touch the potential are not evaluated the same. I
guess the point I'm making is evaluating on multiple of annual revenue is
pointless for start ups. Its only relevant for mature companies.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message -----
From: "Peter R." <[EMAIL PROTECTED]>
To: "WISPA General List" <wireless@wispa.org>
Sent: Sunday, December 03, 2006 2:54 PM
Subject: Re: [WISPA] Network Valuation Considerations
Tom DeReggi wrote:
Nobody in unlicensed is going to get 6X
Thats where you are wrong. However, the value of a higher Multiple is
relevent to the amount of customers one has and what stage of development
the company is in.
Nope. No one is currently paying 6X. Most I have seen is 2.5X.
Companies shopping come to me all the time to make connections.
And I have not seen any pay more than 2.5x. And we are talking MRC not
annual.
Who pays for annual???
If I gave you 6x annual, I wouldn't make money for 7 years or more.
Even at 2.5x MRC, I don't see any pay out for 5 months. 2.5 to pay you ;
2.5 to right the balance sheet.
Oh, let me add that you can get 6X in STOCK!
- Peter
RAD-INFO, Inc.
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