John,
During the last ten years we have purchased and sold several ISP's...
and I can tell you that you NEVER want to "purchase the corporation".
You want to do an "asset only purchase". So you are buying the equipment
(for whatever value you want to put on it) and the customer base. Then,
whatever value you put on the equipment you can begin depreciating just
like if you had purchased it from a vendor.
The cool thing is this number can be whatever you want... because you
can adjust the customer base number to match...
So, if you decide you are going to pay $200,000 for this WISP (including
equipment and customers), you may want the equipment to show $50,000 and
the customer base to show $150,000.... or you may want to do $100,000 /
$100,000. This is something you would want to go over with your
accountant before the actual purchase so it will fit best with your
current business.
Travis
Microserv
John Scrivner wrote:
Tom DeReggi wrote:
The big thing here is... Is one selling revenue or selling a network?
Both. No way around it.
If one is selling revenue, the buyer could probably care less what
allows the revenue to happen.
I have been looking at other WISPs around me for possible merge /
acquisition and I do care. I am a potential buyer of WISPs. I
understand the costs related to forklift upgrades or high costs
related to OPEX of a network if things are not done the way they need
to be done. It most certainly matters to me.
But personally, I Don;t want to jsut sell revenue, I want to get
credit for my infrastructure also.
If a network is installed right, with the right gear, it should be
worth MORE than the cost to buy the gear new uninstalled, NOT LESS
as used gear.
Exactly. Understand this though also. If I am buying a WISP and he has
depreciated all the gear before I bought his corporation then I am a
fool to value his gear higher (zero tax deduction for equipment
depreciation). Please do not think this means that fast depreciation
is a bad thing. It most certainly is not.
Good infrastructure could make or break a deal though too. I would
never pay a good price for a network I did not think was already built
solid and reliable. Why bother? I could always over-build my own
network if I thought the existing network was bad.
It is harsh truth and we all know it happens. None of us own the
spectrum we operate on. Build it right and others would go broke
trying to overbuild you (we hope). Build it like crap and others can
run you out of town (almost certainly). This kind of thinking changes
the perception of the value of one's network doesn't it? We all have
to think about these things when we are building our network. It's the
kind of stuff that makes for sleepless nights for some folks. Do we
build it cheap since we don't own the spectrum and we could be overrun
by spectrum hogs who come to town and trash the spectrum or do we
build it strong and serve our customers well with expensive gear in
hopes others would go broke trying to steal customers too loyal to
leave our service? It is quite a conundrum. One that everyone here
would undoubtedly have a slightly different answer for.
I'd argue Alvarion type gear could maximize the value allocated for
the infrastructure.
I can see that. I can also see other's philosophies too. I do not
think there is one silver bullet design / platform / business plan. I
think there are about 1000 ways to get the job done in unlicensed. I
can see the cream coming to the surface in a few business plans and
platforms though. It is not too hard to see which ones are doing well.
You do not hear much from those doing badly....who could blame them?
It also depends on whetehr someone is trying to get 1X annual versus
6 x annnual. To get the high Xs, you need more than just revenue to
sell.
Nobody in unlicensed is going to get 6X unless they have a network
doing 10s of millions of dollars a year in revenues or a smaller
network with an ARPU of say $500 per sub. Then maybe I could see 6X.
The flip view, is if the flexibilty of selling the Mikrotik can gain
you revenue quicker (which would need debating), then it could be
argued as an advantage to have higher rate of revenue growth than
infrastructure credit..
I have a novel idea. Why doesn't Alvarion sell their basic radios and
firmware in module form to Mikrotik or Mikrotik sell their software
and routers to Alvarion and they put out a jointly developed, dual
branded, certified Alvariok Radio! (Or is it Mikrovion?) Best of both
worlds!
Sorry folks....it's the weekend. We're supposed to have a little fun
right?
Scriv
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