Re: [WISPA] Business Value
Thanks, Faisal...this is good insight. I have had it in my mind that because he wants out now, I will have to begin paying him now. But based on goals we had set previously, he was to stay in for 2 more years. I believe THAT is when he should start being compensated for sweat equity. The layout of cash has always been a different matter. We took out a loan in the beginning to fund initial equipment. That is paid off in 1 month, and it makes sense that that amount should now go to him each month to pay back real $$$ he invested. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Faisal Imtiaz" <[EMAIL PROTECTED]> To: "'WISPA General List'" Sent: Friday, April 28, 2006 4:23 AM Subject: RE: [WISPA] Business Value Mark, As you can tell from all the great replies, there are many different ways to do this. Speaking from past experience, one of the best advice that I had received, was that the folks going into a partnership should negotiate and come to an agreement on Partnership Termination Terms and Conditions, PRIOR to getting into the Partnership. It sounds corny, but believe me, all the time invested upfront on this difficult topic pays off for everyone when the options are exercised. However in this particular case, it is hindsight. Having said that, you have a quiet a few good things going for you. 1. It is an amicable split. 2. Your Partner has a target goal and plan he is working for. 3. You recognize that there are two items to be valued, money and sweat equity. I can see from the other replies that you are getting great advice on the different technical formulas for valuation. I would like to make a very different kind of suggestion, that may work out to be beneficial for both. Needless to say, you and your partner will have to explore and customize whatever agreement that you come up with. If you forget about the technical aspect of the business, and just evaluate it in terms of a generic business, then below listed concepts would apply as long as the two of you understand what the other wants to achieve. I am suspecting that, your partner does not need to pull out the money that he has put into the business, also going to make the assumption that the business is the growing stage and not yet generating positive free cash flow..(positive free cash flow is not the same as profit). Another key business principle, which is often mis-understood is that Compensation and Ownership are two very different things, and they DO NOT have to be interdependent. In my case, prior to getting into the partnership, we negotiated, Ownership (percentage), Compensation agreement, and Termination Terms and conditions. Compensation agreement is based on the principle that the salary/compensation was going to be the same as to what it would cost to higher a similarly qualified employee to fulfill that position. (Adjusted up or down based on the affordability and the company finances). If a partner decided to go silent, (i.e. not work in the business on a day to day basis), then they were not entitled to the salary, only to the profit distributions if any. Any monies invested into the company, were either in form a interest bearing loan (in some cases we accrued the interest and deferred paying it, because we did not have the $$), or the initial 'purchase' of the company stock, which translated into the ownership stake. As to sweat equity, an equalizer formula between the partners can be agreed to, it really doesn't matter what it is as long as it is equitable and both of you agree to it. Based on the above, and the specific needs of you and your partner, you could easily work out a 'Buy Out' plan which would provide a return on investment for him, while providing self financing from the company's growth for you. (e.g. I will use 1% of the company's gross revenues (of 10% of gross profits) to purchase 1/5th of your share, on an annual basis. Or something similar, so that over a defined period of time, you are able to purchase his shares (ownership stake) and he is able to get more $ for it as the company grows) As to the sweat equity, if you both feel that you have put in an equal amount, then the above formula should provide a decent return on the original investment. If you two believe that the sweat equity was not equal, then the above formula should be adjusted to be more favorable for your partner. Overall, the concept is that, most folks who start small business do that so as to get a return on the investment down the road when the business is doing well. Just because the partner is leaving to focus on other things, and there is no desperate need for cash, especially in amicable separations, there is nothing which says that one cannot still continue toward
Re: [WISPA] Business Value OT Business Growth Rate
The growth rate is not your problem, its the buyer's problem, thats what they contribute by injecting cash. Whats important is... What assets does your company have that will allow a growth rate to be higher, if the buyer leverages your assets to do it. And What size is the market and how much of the markets has been taken by you so far? So if you live in asmall town of 100 and you have 70 of the clients there is not a potential for growth. IF you live in atown of 20,000 and you have a 70 of them, there is a huge growth rate. Now if you have agreements in place with landlords that allows you to serve 5,000, well thats an asset of value that you posses, regardless if your company as is has the abilty to acheive a high growth rate as is. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: "Victoria" <[EMAIL PROTECTED]> To: "'WISPA General List'" Sent: Friday, April 28, 2006 12:40 PM Subject: RE: [WISPA] Business Value OT Business Growth Rate This is an interesting model that I am currently looking into. I have had offers on our business that equaled the 1.5+ for buy out. However my question is, if one were purchasing an existing business, what should the expected growth rate be? I realize that their could be two figures, one for rural and the second for metro. Thanks. Victoria Proffer www.StLouisBroadBand.com 314-974-5600 -- 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] Business Value OT Business Growth Rate
It takes a bit to ramp up. The first 6 months are often pretty slow, after that it normally kicks up really quickly. Especially lately. We're seeing anywhere from 50 to 100% per year growth rates depending on market size, funding, network type etc. I'm not advertising because we can't cash flow the growth that we're getting from word of mouth. We're seeing 100% growth every 2 years on word of mouth alone. And we have HEAVY competition in all population centers out here. Heck, just this week I heard of a new wisp that's putting up at least 4 towers in one of my most rural areas. I wish I had his money! hehehehe See how long this one lasts. I've seen quite a few do stuff like that over the years, they rarely last longer than 2 or 4 years. laters, Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Victoria" <[EMAIL PROTECTED]> To: "'WISPA General List'" Sent: Friday, April 28, 2006 9:40 AM Subject: RE: [WISPA] Business Value OT Business Growth Rate This is an interesting model that I am currently looking into. I have had offers on our business that equaled the 1.5+ for buy out. However my question is, if one were purchasing an existing business, what should the expected growth rate be? I realize that their could be two figures, one for rural and the second for metro. Thanks. Victoria Proffer www.StLouisBroadBand.com 314-974-5600 -- 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] Business Value OT Business Growth Rate
This is an interesting model that I am currently looking into. I have had offers on our business that equaled the 1.5+ for buy out. However my question is, if one were purchasing an existing business, what should the expected growth rate be? I realize that their could be two figures, one for rural and the second for metro. Thanks. Victoria Proffer www.StLouisBroadBand.com 314-974-5600 -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Business Value
s going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Business Value I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- 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/ -- 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] Business Value
The time is coming for WISPs to grow up to the point where they can not only participate in but lead the evolution of the industry through effective leverage of potentials like the AWS auction with proper capitalization. Consolidation: don't wait for it, do it! Best,-- Dylan OliverPrimaverity, LLC -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Business Value
chris cooper wrote: It's the big investors that will get it in the end. They will come with large bags of cash or paper, consolidate and either take the profits or flip it to someone else who will. Chris The big investors will probably never get it. But the medium sized folks surely will. Those that are interested in running a business not bilking other investors. Um, the big investors are starting to come. hence Open Range 190 rural communities across the us. Thats a big investor. Lets not forget Clearwires expansion and recent buyout on the east coast of a local wisp. I feel the time is getting closer to consolidation. I mean consolidation between a wisp like any of us and the wisp next door to us. George -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
RE: [WISPA] Business Value
It's the big investors that will get it in the end. They will come with large bags of cash or paper, consolidate and either take the profits or flip it to someone else who will. Chris The big investors will probably never get it. But the medium sized folks surely will. Those that are interested in running a business not bilking other investors. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Business Value
Man, it's all over the board isn't it. I know of one that was a mix of wifi and non wifi. Sold out for 1.5x or 2x annual revenue PLUS a few tens of dollars for every customer that the network would reasonably support. Guess it depends on how bad a guy wants out. I know I'd not sell for 1 x annual revenue. No way. When we finally get all of the debt paid off we'll be at nearly a 50% margin! And I've built out almost as far as I can go as a one man shop. I just need to keep up with technology not build a ton of new stuff. Oh sure, I've got a lot of coverage holes to fill in, but that's not gonna be all that big of a deal. The real value of a wisp is still a few years away. We have to wait for more of the muni networks to fail and certainly for the verizons and googles to fail at it. Once they go down and we're still standing people will FINALLY understand that WE are the ones with the viable business plans. The big investors will probably never get it. But the medium sized folks surely will. Those that are interested in running a business not bilking other investors. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "George" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 6:14 PM Subject: Re: [WISPA] Business Value Mark at the Chicago Wispnog Charles put on, there was a couple investors that bought and sold wisps. We had a session on it. The way they described the valuation of a wisp brought the price down well under 1x yearly revenue. More like 6 months of revenue cash buyout. They picked everything apart and devalued based on what ever they could find. And there was a couple of wisps who sold their operation for about 1x yearly. One guy said the buyer wanted some of his commercial subs and took the whole thing and even hired him and another seller said he wanted to toss in the towel after fighting with the telco, get a law degree and donate the rest of his life to fighting the telco's I seem to remember that he sold for under 1x with some cash now and paper. Both of these guys were 802.11b wisps. And I think both are still on some of the wireless lists. You might want to ask on the isp-wireless list or part-15 list as well. Seems that wisps with contracts to their customers and a network of Alvarion, Trango, Canopy or similar was more appealing and had a higher value. Maybe this is helpfull. How many subs do you have? George Mark Nash wrote: Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install
Re: [WISPA] Business Value
It's nice to hear of a story like that for a change! Good for you two. As I see it there's three ways that this would work out. Buy out his cash input plus a fair amount for his sweat equity. Figure out your last 12 months income, multiply by 2 if you're making money, 1.2 if not, if it's close use something in between. Divide that by 2 and pay him his share. Lastly, and probably my favotire (remember I'm sitting here not there), pay back his cash and leave him as a 10% or so such figure stock holder. Hope that helps! Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:51 PM Subject: Re: [WISPA] Business Value Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Business Value I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/piperma
RE: [WISPA] Business Value
Mark, As you can tell from all the great replies, there are many different ways to do this. Speaking from past experience, one of the best advice that I had received, was that the folks going into a partnership should negotiate and come to an agreement on Partnership Termination Terms and Conditions, PRIOR to getting into the Partnership. It sounds corny, but believe me, all the time invested upfront on this difficult topic pays off for everyone when the options are exercised. However in this particular case, it is hindsight. Having said that, you have a quiet a few good things going for you. 1. It is an amicable split. 2. Your Partner has a target goal and plan he is working for. 3. You recognize that there are two items to be valued, money and sweat equity. I can see from the other replies that you are getting great advice on the different technical formulas for valuation. I would like to make a very different kind of suggestion, that may work out to be beneficial for both. Needless to say, you and your partner will have to explore and customize whatever agreement that you come up with. If you forget about the technical aspect of the business, and just evaluate it in terms of a generic business, then below listed concepts would apply as long as the two of you understand what the other wants to achieve. I am suspecting that, your partner does not need to pull out the money that he has put into the business, also going to make the assumption that the business is the growing stage and not yet generating positive free cash flow..(positive free cash flow is not the same as profit). Another key business principle, which is often mis-understood is that Compensation and Ownership are two very different things, and they DO NOT have to be interdependent. In my case, prior to getting into the partnership, we negotiated, Ownership (percentage), Compensation agreement, and Termination Terms and conditions. Compensation agreement is based on the principle that the salary/compensation was going to be the same as to what it would cost to higher a similarly qualified employee to fulfill that position. (Adjusted up or down based on the affordability and the company finances). If a partner decided to go silent, (i.e. not work in the business on a day to day basis), then they were not entitled to the salary, only to the profit distributions if any. Any monies invested into the company, were either in form a interest bearing loan (in some cases we accrued the interest and deferred paying it, because we did not have the $$), or the initial 'purchase' of the company stock, which translated into the ownership stake. As to sweat equity, an equalizer formula between the partners can be agreed to, it really doesn't matter what it is as long as it is equitable and both of you agree to it. Based on the above, and the specific needs of you and your partner, you could easily work out a 'Buy Out' plan which would provide a return on investment for him, while providing self financing from the company's growth for you. (e.g. I will use 1% of the company's gross revenues (of 10% of gross profits) to purchase 1/5th of your share, on an annual basis. Or something similar, so that over a defined period of time, you are able to purchase his shares (ownership stake) and he is able to get more $ for it as the company grows) As to the sweat equity, if you both feel that you have put in an equal amount, then the above formula should provide a decent return on the original investment. If you two believe that the sweat equity was not equal, then the above formula should be adjusted to be more favorable for your partner. Overall, the concept is that, most folks who start small business do that so as to get a return on the investment down the road when the business is doing well. Just because the partner is leaving to focus on other things, and there is no desperate need for cash, especially in amicable separations, there is nothing which says that one cannot still continue towards the original goal...to provide a good return on original investment a little bit further down the road when the business is healthy. Faisal Imtiaz SnappyDSL.net -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Mark Nash Sent: Thursday, April 27, 2006 6:52 PM To: WISPA General List Subject: Re: [WISPA] Business Value Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm
RE: [WISPA] Business Value
One thing to remember -- when buying and selling a business (or anything for the matter) there has to be benefits on both sides (e.g., a win-win solution) Just as you are trying to maximize all your time and effort put into your company, the buyer needs to be able to see a light at the end of the tunnel (e.g., look at your business from the outside, and, being honest w/ yourself, ask yourself how much you'd be willing to pay for it, given an acceptable risk / reward ratio where you also have other options in investing your money -- e.g., stocks / real estate / etc) >From a valuation perspective, if you want $ -- the *good* companies are able to get up to 1.5x annual revenues (e.g., solid stand-alone businesses that are profitable, self sustainalbe, etc -- using a standard residential pure-play WISP business model w/ a $40-60 / month ARPU -- it means you need to have a minimum of at least 1000 customers to make this cut) That said, at 180 customers, the bad news is is that you're probably sitting at a pain point where the value of your business (e.g., what you can realistically sell for) is still far less than what you have invested in it -Charles --- CWLab Technology Architects http://www.cwlab.com -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of George Sent: Thursday, April 27, 2006 8:15 PM To: WISPA General List Subject: Re: [WISPA] Business Value Mark at the Chicago Wispnog Charles put on, there was a couple investors that bought and sold wisps. We had a session on it. The way they described the valuation of a wisp brought the price down well under 1x yearly revenue. More like 6 months of revenue cash buyout. They picked everything apart and devalued based on what ever they could find. And there was a couple of wisps who sold their operation for about 1x yearly. One guy said the buyer wanted some of his commercial subs and took the whole thing and even hired him and another seller said he wanted to toss in the towel after fighting with the telco, get a law degree and donate the rest of his life to fighting the telco's I seem to remember that he sold for under 1x with some cash now and paper. Both of these guys were 802.11b wisps. And I think both are still on some of the wireless lists. You might want to ask on the isp-wireless list or part-15 list as well. Seems that wisps with contracts to their customers and a network of Alvarion, Trango, Canopy or similar was more appealing and had a higher value. Maybe this is helpfull. How many subs do you have? George Mark Nash wrote: > Thanks Marlon... For the record, it's not a rough split between me and > my partner. He's got a more profitable business going, he's put up > money for the wireless business, he's 53 and going to retire when he's > 55, so he wants to focus on his other business. That's what I would do > if I were him. The money he put in is easy to account for and pay back, > but he has also put in a considerable amount of unpaid time and he'd > like to realize some benefit from that, and I should honor that in the > split. Makes sense. So I'm trying to figure out what's reasonable to > offer for his part in all of this. > > Mark Nash > Network Engineer > UnwiredOnline.Net > 350 Holly Street > Junction City, OR 97448 > http://www.uwol.net > 541-998- > 541-998-5599 fax > - Original Message - From: "Marlon K. Schafer (509) 982-2181" > <[EMAIL PROTECTED]> > To: "WISPA General List" > Sent: Thursday, April 27, 2006 3:45 PM > Subject: Re: [WISPA] Business Value > > >> Hi Mark, >> >> I don't have time to get into the deep details right now. I can >> probably help with this if you'd like. I've done some valuations >> based on income, customer base etc. >> >> Standard business stuff would put your company value at 1.2 to 2x >> annual earnings. OR 3 to 5 x annual profit (probably not much of that >> if you're growing well). >> >> With a wisp, it gets more complicated because most wisps are growing >> fast and are just starting to get into the profit mode. So the value >> of the company won't even hit most guys for a couple more years. shrug >> >> I've also seen WISPs get paid for the number of homes passed in >> addition to the above. >> >> The last valuation I did I took the number of customers possible on >> the hardware installed, cut that down to more reasonable numbers (100 >> users per ap), figured a moderate growth rate (max of 4 per day after >> 3 years) and came up with an expected customer base in 36 months. >> That's the point that I put a value on the compa
Re: [WISPA] Business Value
Yeah...we actually now cover West Eugene all the way up to south of Corvallis all backhauled into one POP in JC. A very large footprint. CPE costs vs. our install fee have just come down to the right price to begin building much faster. We are pushing hard this summer/fall. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "George" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 6:29 PM Subject: Re: [WISPA] Business Value Nice, especially for small town like JC. George Mark Nash wrote: It's about 180 I think. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- 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] Business Value
Nice, especially for small town like JC. George Mark Nash wrote: It's about 180 I think. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Business Value
It's about 180 I think. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "George" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 6:14 PM Subject: Re: [WISPA] Business Value Mark at the Chicago Wispnog Charles put on, there was a couple investors that bought and sold wisps. We had a session on it. The way they described the valuation of a wisp brought the price down well under 1x yearly revenue. More like 6 months of revenue cash buyout. They picked everything apart and devalued based on what ever they could find. And there was a couple of wisps who sold their operation for about 1x yearly. One guy said the buyer wanted some of his commercial subs and took the whole thing and even hired him and another seller said he wanted to toss in the towel after fighting with the telco, get a law degree and donate the rest of his life to fighting the telco's I seem to remember that he sold for under 1x with some cash now and paper. Both of these guys were 802.11b wisps. And I think both are still on some of the wireless lists. You might want to ask on the isp-wireless list or part-15 list as well. Seems that wisps with contracts to their customers and a network of Alvarion, Trango, Canopy or similar was more appealing and had a higher value. Maybe this is helpfull. How many subs do you have? George Mark Nash wrote: Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Busin
Re: [WISPA] Business Value
Mark at the Chicago Wispnog Charles put on, there was a couple investors that bought and sold wisps. We had a session on it. The way they described the valuation of a wisp brought the price down well under 1x yearly revenue. More like 6 months of revenue cash buyout. They picked everything apart and devalued based on what ever they could find. And there was a couple of wisps who sold their operation for about 1x yearly. One guy said the buyer wanted some of his commercial subs and took the whole thing and even hired him and another seller said he wanted to toss in the towel after fighting with the telco, get a law degree and donate the rest of his life to fighting the telco's I seem to remember that he sold for under 1x with some cash now and paper. Both of these guys were 802.11b wisps. And I think both are still on some of the wireless lists. You might want to ask on the isp-wireless list or part-15 list as well. Seems that wisps with contracts to their customers and a network of Alvarion, Trango, Canopy or similar was more appealing and had a higher value. Maybe this is helpfull. How many subs do you have? George Mark Nash wrote: Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Business Value I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- WISPA Wireless List: wireless@wispa
Re: [WISPA] Business Value
Thanks Marlon... For the record, it's not a rough split between me and my partner. He's got a more profitable business going, he's put up money for the wireless business, he's 53 and going to retire when he's 55, so he wants to focus on his other business. That's what I would do if I were him. The money he put in is easy to account for and pay back, but he has also put in a considerable amount of unpaid time and he'd like to realize some benefit from that, and I should honor that in the split. Makes sense. So I'm trying to figure out what's reasonable to offer for his part in all of this. Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax - Original Message - From: "Marlon K. Schafer (509) 982-2181" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 3:45 PM Subject: Re: [WISPA] Business Value Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Business Value I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- 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/ -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Business Value
Hi Mark, I don't have time to get into the deep details right now. I can probably help with this if you'd like. I've done some valuations based on income, customer base etc. Standard business stuff would put your company value at 1.2 to 2x annual earnings. OR 3 to 5 x annual profit (probably not much of that if you're growing well). With a wisp, it gets more complicated because most wisps are growing fast and are just starting to get into the profit mode. So the value of the company won't even hit most guys for a couple more years. shrug I've also seen WISPs get paid for the number of homes passed in addition to the above. The last valuation I did I took the number of customers possible on the hardware installed, cut that down to more reasonable numbers (100 users per ap), figured a moderate growth rate (max of 4 per day after 3 years) and came up with an expected customer base in 36 months. That's the point that I put a value on the company. I used 1.5x annual earnings. At this point the company would have been HUGELY profitable though. (started out with 1 install per day, ramped that up by 1 every 6 months or so) *I* think I had a reasonable growth rate (market size was nearly 1,000,000 people much of which had NO broadband) and left room for several competitors to gain market share. On a partnership breakup it gets more difficult. No one probably has any money (or they'd not be fighting so much in the first place). One guy usually put up all the funding and the other one did all of the work. There are hard feelings and often friendships on the line. In those cases about all you can do is to take the income today and use that for the value. Or one partner can agree to go silent and let the other one carry on with business. Tough stuff either way. Hope that helps. Feel free to call if you'd like to talk it over some more. Marlon (509) 982-2181 Equipment sales (408) 907-6910 (Vonage)Consulting services 42846865 (icq)And I run my own wisp! 64.146.146.12 (net meeting) www.odessaoffice.com/wireless www.odessaoffice.com/marlon/cam - Original Message - From: "Mark Nash" <[EMAIL PROTECTED]> To: "WISPA General List" Sent: Thursday, April 27, 2006 7:31 AM Subject: [WISPA] Business Value I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- 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: OFFLIST Re: [WISPA] Business Value
Hey look everybody. I send offlist emails onlist. :) doh! Brian Rohrbacher wrote: Call me. 269 838 8338 Brian Mark Nash wrote: I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
OFFLIST Re: [WISPA] Business Value
Call me. 269 838 8338 Brian Mark Nash wrote: I may be splitting with my partner in the coming months. We'll have to come up with a buy-out agreement. Has anyone got experience with valuating WISP businesses? Mark Nash Network Engineer UnwiredOnline.Net 350 Holly Street Junction City, OR 97448 http://www.uwol.net 541-998- 541-998-5599 fax -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
