Are you asking about a price on the assumption you would be the buyer, or the competitor? Ideally a value would be based on EBIDTA not revenue. Lacking that information, maybe somewhere between 6 and 12 months revenue. Probably seller financing, something along the lines of he gets 75% of revenue and you get 25% for the first year, then you own it. But it sounds like he owes you a bunch of money. And you really don’t want it. If you don’t want it, it’s worth zero. Also you want to buy the assets not the company, structure it so that you don’t get hit with debts and other liabilities. And remember to factor in prepays, if he is short of operating capital, he may be getting a lot of customers to pay yearly, in which case on average you provide service for 6 months but he already got the revenue.
I think the idea behind paying some multiple of yearly revenue is that you’re acquiring customers, in which case it has to be weighed against the cost of acquiring a customer through other means, like advertising or promos. Which brings up the question, do your networks overlap? If he fails, do the customers come to you anyway? Do you and the competitor split them? If you will get the customers anyway, why pay him for them? >From the information you provided, it seems unlikely you’ll ever see the money >owed you. He probably realizes this. Maybe he hopes to sell to the >competitor to get cash to pay his debt to you, that’s probably wishful >thinking. Or he sells to you and after accounting for what he owes you he >gets very little. There is a saying don’t throw good money after bad. Ask yourself what is the probability you will ever see any of the money he owes you. If the chances are slim to none, you need to move forward on that basis. Maybe that means cut the cord and let him fail. If you realistically think he can repay you, which scenario makes that more likely, you buying or the competitor buying? It would really suck if he sold to the competitor and still didn’t pay you what he owes. But if you buy him out, that probably means you’re taking what he owes out of the sales price, and he may not get much cash out of the deal. From: AF <[email protected]> On Behalf Of TJ Trout Sent: Tuesday, July 16, 2019 4:03 AM To: AnimalFarm Microwave Users Group <[email protected]> Subject: Re: [AFMUG] Wisp value Jeez my cell phone keyboard is terrible! On Tue, Jul 16, 2019, 1:59 AM TJ Trout <[email protected] <mailto:[email protected]> > wrote: I've been mentoring a friend of mine, he's young and rather ambitious. He started out his 'wisp' using a residential cable connection, I've helped him for basically free for the last three years grow his base to 250 customers, he just last week acquired a failing wisp with 65 subs on a no money down, pay us a commission basis. I've been managing most of his core network and providing him IPv4 and transit for a steal of a price, I even loaned him a substantial amount of cash recently to buy a bunch of surplus equipment. Well anyway I guess he got caught with another women and his wife is demanding he shut down or sell the wisp for whatever reason, he called and put this all on my plate today. Instead of offering to sell me the company (I don't really want it) he tellse that he's going to try selling to a local competitor whom I consider slightly a better personal than a child molester. So anyway I'll try to stop rambling, what's a wisp Worth these days? Gross revenue for a year is what I figure (max) with his all used ubnt equipment? The other dilemma is that he's about 3 months behind on his transit and his note is due for repayment Monday ~$15k total. I need a way to ensure I get paid current and I don't let him get behind during the 'sale'. I was thinking to quit being the nice guy and demand the past due balance + the note in full + 3 months transit in advance so I don't get screwed during the sale process if he gets behind again. I don't know if he can even come up with the money and my only leverage is to turn his port down... I have a strange feeling he may try to stall me as long as possible until the competition can thing in transit and run off without paying the bill.... Sorry for he rant, just sick of helping people because every time I do I end up regretting it. TJ
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