Re: [WISPA] Network Valuation Considerations
John, My error, sorry about that. But I disagree still with your comment. I think I may be being misunderstood. I'd argue that a company doing millions of dollars and/or Smaller High ARPU business are LESS LIKELY to get higher Multiples. The reason is that the businesses are already matured if they are doing that, and the "potential" is not what is being sold, because the "potential" had already been realized. So a mature business is bought on multiple of "revenue". Where high multiples are given are for very young and non-matured companies, when the yearly revenue may still be very very small, sometimes even a fraction of what the investment was to build the network intially/recently. Higher multiple does not necessarilly mean higher profit/ROI at sale time. There is a misconception that I often hear from buyers, "Why should I pay you more than it cost you to build your network, or for me to build a new network on top of yours with newer technology?" The reasons is that one's network is a "engine" to generate revenue. There were many costs to build the network way beyond the cost of the equipment itself. Contract negotiations, planning, demographics, Site planning, labor, brand awareness, time to market, first in real estate advantage, etc". The longer someone waits after building their network to go to the deal table, could mean lowering their multiple, but the longer they wait, the more likely they'll have more revenue to get a multiple on. The only time soneone should get less money for their equipment installed than they paid for it, is if it has lost its value because it has become obsolete or inadequate for the job compared to new trends in technology or the market place. Thats is why a seller of a 802.11b network will get very little value for thier infrastructure, but a Alvarion or Trango type network will be more likely to hold its value. I'm uncertain what a 802.11a Mikrotik.StarOS type network would evaluate for. It's not certified/legal, but it still has current day speed, and as advanced features as most would ever need. I also think a lot of this depends on who being sold to. If you are selling to a telco, I'd argue that many Unlicensed networks will not get full value consideration for the hardware infrastructure. Thats just because of the hype to need WiMax, or higher bandwdith technology that is telephone grade, such as 100mbps and gb technology. But if you have Canopy and selling to earthlink, or using Mikrotik and selling to another Mikrotik WISP, or Trango selling to a Trango roll up, I'd argue that having that gear is an asset. I think getting the beset evaluation is picking the right buyer for your type network. We could go top the extreme and argue that if you are selling to a national Hotspot roll up, You'd be worth more if your network was 802.11b. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: "John Scrivner" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Sunday, December 03, 2006 1:11 PM Subject: Re: [WISPA] Network Valuation Considerations Tom, I do not mind having my posts clipped for content when replying but I do mind it when you do it mid-sentence and change what I said. My sentence read, "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." Tom DeReggi wrote: Nobody in unlicensed is going to get 6X Thats where you are wrong. Actually I do not think I am wrong. If you can find a single case to back up that I am out of line in my thinking then please share it before saying I am wrong. I do not think 6X has ever been paid unless there were some other outrageous value propositions involved in the deal. I do not think I am 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. For example, If I bulit a network today, the very first day after it was turned live, there would be Zero customers and zero revenue, just monthly loss for the reoccuring fees that the company obligated themselves to. Would you then say the company was worthless because it had zero revenue? From a resell standpoint, at that moment in time, your company could well be worth less than what you paid to build it. It is just like driving a car off the lot. It depreciates thousands of dollars the first few feet off the lot. Selling on multiple of revenue would be stupid. If your neighbor thought you were a threat and wanted what you built, you would sell for the "cost to build" + ROI for creating the "potential". Its very possible that a 6X evaluation 6 months after start
Re: [WISPA] Network Valuation Considerations
Brad, This is where I have to disagree with you... what type of CPE is much more important for me than the backhaul used. As an example, if the CPE is 802.11b and they have 1,000 customers, I have to visit 1,000 locations and upgrade every single customer. However, if they are using Trango, Canopy or Alvarion and using 802.11b for backhaul (just for fun), then I only have to replace 30 or 40 backhaul radios and all the customers are set. Plus I have access to the tower locations 24 hours per day, rather than when customers are available. But I do agree, there are many, many factors involved in the value of a business... but the revenue multiplier seems to be the "quickest" way to determine a baseline. Travis Microserv Brad Belton wrote: I think in most cases I've seen they are referring to a multiple of yearly revenue not monthly. So your 12x monthly is equal to 1x yearly. Determining a valuation of a company is rarely performed with only one factor taken into account. Simply saying an operation is worth x times yearly revenue is silly as there are too many variables to take into consideration. Is company "A" that generates $1M in annual revenue worth more or less than company "B" that generates $500K in annual revenue? Nobody can answer that question until each company is thoroughly evaluated and even then it will be unlikely two independent parties will arrive at the same number. Regarding the equipment used, I believe a network built with carrier grade equipment will always be worth more than an Alvarion or similar "best effort" network. Backhaul infrastructure is far more important in the evaluation of network value than the CPE. CPE only continues to drop in price and therefore will only continue to drop in importance in the overall valuation of a network. The rollups with large money won't be looking at CPE equipment as a deciding factor because they will ultimately be replacing all CPE with their own proprietary gear probably a licensed product. Instead they will be looking at real estate assets, client base, contractual agreements and most importantly PROFITS just to name a few key sticking points. Best, Brad -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Travis Johnson Sent: Sunday, December 03, 2006 4:00 PM To: [EMAIL PROTECTED]; WISPA General List Subject: Re: [WISPA] Network Valuation Considerations So you are saying you haven't seen more than 2.5X the monthly revenue? We sold a division of our company for 12X the monthly revenue + the FMV of the equipment in 2001. The current going rate that I have seen is more around 12X monthly + equipment infrastructure. Travis Microserv Peter R. wrote: 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. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
RE: [WISPA] Network Valuation Considerations
I think in most cases I've seen they are referring to a multiple of yearly revenue not monthly. So your 12x monthly is equal to 1x yearly. Determining a valuation of a company is rarely performed with only one factor taken into account. Simply saying an operation is worth x times yearly revenue is silly as there are too many variables to take into consideration. Is company "A" that generates $1M in annual revenue worth more or less than company "B" that generates $500K in annual revenue? Nobody can answer that question until each company is thoroughly evaluated and even then it will be unlikely two independent parties will arrive at the same number. Regarding the equipment used, I believe a network built with carrier grade equipment will always be worth more than an Alvarion or similar "best effort" network. Backhaul infrastructure is far more important in the evaluation of network value than the CPE. CPE only continues to drop in price and therefore will only continue to drop in importance in the overall valuation of a network. The rollups with large money won't be looking at CPE equipment as a deciding factor because they will ultimately be replacing all CPE with their own proprietary gear probably a licensed product. Instead they will be looking at real estate assets, client base, contractual agreements and most importantly PROFITS just to name a few key sticking points. Best, Brad -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Travis Johnson Sent: Sunday, December 03, 2006 4:00 PM To: [EMAIL PROTECTED]; WISPA General List Subject: Re: [WISPA] Network Valuation Considerations So you are saying you haven't seen more than 2.5X the monthly revenue? We sold a division of our company for 12X the monthly revenue + the FMV of the equipment in 2001. The current going rate that I have seen is more around 12X monthly + equipment infrastructure. Travis Microserv Peter R. wrote: > 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. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Network Valuation Considerations
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 badlywho 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 folksit's the weekend. We're supposed to have a little fun right? Scriv -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Network Valuation Considerations
So you are saying you haven't seen more than 2.5X the monthly revenue? We sold a division of our company for 12X the monthly revenue + the FMV of the equipment in 2001. The current going rate that I have seen is more around 12X monthly + equipment infrastructure. Travis Microserv Peter R. wrote: 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. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Network Valuation Considerations
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" 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. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Network Valuation Considerations
John Scrivner wrote: From a resell standpoint, at that moment in time, your company could well be worth less than what you paid to build it. It is just like driving a car off the lot. It depreciates thousands of dollars the first few feet off the lot. CLEC's are a great example of not getting back what you paid for it. Look at GX or Nuvox. Nuvox has $1B invested. $1B. They do $300M in revenue. No one is gonna pay $1B for it. A perfect example is L3 buying Progress for "Under the terms of the agreement, Level 3 expects to pay total consideration of $137 million, consisting of $68.5 million in unregistered shares of Level 3 Common Stock and $68.5 million in cash." Progress has 9000 miles of fiber. They own that fiber, not IRU's or leased, but routed miles of fiber and conduit. Progress had about $20M in revenue. So they got 3.4x ARC, but did NOT get back the investment in 9000 miles of fiber. It is unlikely that any company can sell and recoup the cost of the network build out. You would need to have a network that is packed with revenue from multi-year contracted businesses, IMO. Regards, Peter RAD-INFO, Inc. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
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. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Network Valuation Considerations
Tom, I do not mind having my posts clipped for content when replying but I do mind it when you do it mid-sentence and change what I said. My sentence read, "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." Tom DeReggi wrote: Nobody in unlicensed is going to get 6X Thats where you are wrong. Actually I do not think I am wrong. If you can find a single case to back up that I am out of line in my thinking then please share it before saying I am wrong. I do not think 6X has ever been paid unless there were some other outrageous value propositions involved in the deal. I do not think I am 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. For example, If I bulit a network today, the very first day after it was turned live, there would be Zero customers and zero revenue, just monthly loss for the reoccuring fees that the company obligated themselves to. Would you then say the company was worthless because it had zero revenue? From a resell standpoint, at that moment in time, your company could well be worth less than what you paid to build it. It is just like driving a car off the lot. It depreciates thousands of dollars the first few feet off the lot. Selling on multiple of revenue would be stupid. If your neighbor thought you were a threat and wanted what you built, you would sell for the "cost to build" + ROI for creating the "potential". Its very possible that a 6X evaluation 6 months after starting would be no where near the same profit margin in a sale as getting 1X after the second year. Let's get this straight. I was not insinuating that the 6X had to include the assets of the company. There is always a settling of debt and equity in a deal like this that has no part in the valuation of the multiples of revenues. It looks like this (multiple of revenues + cash + assets - debt = selling price) At least this is how I have done it when working with others on both sides of the table. I got a 6X offer a number of years back and turned it down, because I like the business, I wasn't done yet, and it was way to early in the development of my company relating to revenue. If you bought a race car, would you sell it for revenue, before it ran its first race? Or even First year at the track? No. People buy the race car, for the hope it will allow them to win races in the future. Buying Alvarion is like buying a supercharged race car, that you want to guarantee can hold up on the track year after year without blowing engines. Where the trick comes in is having the revenue and the infrastructure in top form, racing to be the first to the finish line, to have as much revenue as poissible in the shortest period as can be, so infrastructure still has the highest value, so at evaluation day, you can maximize a ROI. I'm not saying Alvarion or Mikrotik is better for a WISP, I'm just saying, each of them has clear benefits over the other, and Alvarion's clearly is ruggedness. And that can't hurt an evaluation. > (zero tax deduction for equipment depreciation). Great Point. That also reminds me that owning the CPE outright may not always be an advantage in an evaluation either. The buyer gets hit with heavy Property tax every year, that adds up to a significant amount. Property tax? Explain please. I do not know what you are talking about here. I have always thought of property taxes as having to do with real estate. Are you talking about having to pay taxes on asset values after depreciation? We are concidering owning the gear not more than the first year, and then switching to term contract after the first year, or giving it to them right from the start under a cancellable term contract, and (then when they renew the contract -idea 1), we give them the CPE, and secure the term contract with the gear. Because you can gift anything under $600 with out 1099, and CPE cost is less than $600, You could by pass property tax, sales tax, Possibly still get the full deduction of the gear (section 179), and still have the security of having term contract with subs to help bank financing and evaluations. This is a mute point for people that lease, but for people that pay cash, this may be a better tax way to do it. Tom, sorry to act like your 6th grade English teacher but the term is "moot point" not "mute point". Remember Tom, a friend will tell you if you have food on your face at dinner. You had some on your face. Disclaimer, I'm not an accountant, and still checking the viability of the idea. The end user contract can be cancellable any time without penalty, they just have to give you the gear back as condition of breaking the term. The only disadavantage I saw of this, is that o
Re: [WISPA] Network Valuation Considerations
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. For example, If I bulit a network today, the very first day after it was turned live, there would be Zero customers and zero revenue, just monthly loss for the reoccuring fees that the company obligated themselves to. Would you then say the company was worthless because it had zero revenue? Selling on multiple of revenue would be stupid. If your neighbor thought you were a threat and wanted what you built, you would sell for the "cost to build" + ROI for creating the "potential". Its very possible that a 6X evaluation 6 months after starting would be no where near the same profit margin in a sale as getting 1X after the second year. I got a 6X offer a number of years back and turned it down, because I like the business, I wasn't done yet, and it was way to early in the development of my company relating to revenue. If you bought a race car, would you sell it for revenue, before it ran its first race? Or even First year at the track? No. People buy the race car, for the hope it will allow them to win races in the future. Buying Alvarion is like buying a supercharged race car, that you want to guarantee can hold up on the track year after year without blowing engines. Where the trick comes in is having the revenue and the infrastructure in top form, racing to be the first to the finish line, to have as much revenue as poissible in the shortest period as can be, so infrastructure still has the highest value, so at evaluation day, you can maximize a ROI. I'm not saying Alvarion or Mikrotik is better for a WISP, I'm just saying, each of them has clear benefits over the other, and Alvarion's clearly is ruggedness. And that can't hurt an evaluation. > (zero tax deduction for equipment depreciation). Great Point. That also reminds me that owning the CPE outright may not always be an advantage in an evaluation either. The buyer gets hit with heavy Property tax every year, that adds up to a significant amount. We are concidering owning the gear not more than the first year, and then switching to term contract after the first year, or giving it to them right from the start under a cancellable term contract, and (then when they renew the contract -idea 1), we give them the CPE, and secure the term contract with the gear. Because you can gift anything under $600 with out 1099, and CPE cost is less than $600, You could by pass property tax, sales tax, Possibly still get the full deduction of the gear (section 179), and still have the security of having term contract with subs to help bank financing and evaluations. This is a mute point for people that lease, but for people that pay cash, this may be a better tax way to do it. Disclaimer, I'm not an accountant, and still checking the viability of the idea. The end user contract can be cancellable any time without penalty, they just have to give you the gear back as condition of breaking the term. The only disadavantage I saw of this, is that on the balance sheet it would show less assets owned by the comapny, but it could still be reflected on the books as a dollar value of "security" as collateral for revenue. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: "John Scrivner" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Sunday, December 03, 2006 11:31 AM Subject: [WISPA] Network Valuation Considerations 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 ba