Although steps in the right direction, a couple points.... >The way each ISP is being evaluated is based on a formula that take >subscriber numbers, income, and gross costs into account. This >flattens out the playing field between all players whether they bring >in 500 customers or 10K.
I guess it boils down to the formula. The problem is that "potential" isn't easilly put into that formula. If all entities dont have the same cash/finance options as others, potential for each participant may not be reached at the same time. The formulas only work if each has reached equal potential. People with less finance generally just have longer ROI strategies, but potential may be just as high. This problem could make it difficult for potential participants to be willing to commit to accepting the formulas. The only way I see it working is if 1) all particpants are at simplar stages, or 2) teh agreegator has the financial resources and willing to use them to help all particpants reach their potential by target deadline. Otherwise, prospective participants can easilyl predict they will get screwed. >As we know, in whatever final structure the company takes form as, >each area will require basically the same individuals to manage, grow, >and support that area. So continued employment should be a non-issue. >If you still want to work... That's another question. I would. We all know that is never able to be guaranteed. They keep working hard or they get booted. The upgame for WISPs is that they eventually will make money but not have to work hard to keep receiving the reoccuring revenue. Continiueing to work at market rate street price salary isn't really a benefit, in exchange for just stock. Most buyers will never pay in cash what a WISP is worth to the WISP itself. The WISP is willing to take RISKs the buyer isn't. >Volume discounts are just a free benefit. In tier 3 areas, we pay >between $50 to $12 / meg for bandwidth, 6-8 for Tier 1, depending on >the amount purchased. We also have been successful at getting $0 >fiber build outs to our nocs. This kind of proves my point... Benefits are never as good as the offerer thinks they are. I'm a tiny little company and have gained better pricing. I've paid as little as $2 /mb in URban, and $10-$15 in rural. >As I've stated. Each subsidiary remains substantially independent. >What we are providing is a path to real financial reward for your >efforts. There is no risk in pledging support to join should a deal come to play at an agreeable pre-defined rate, and all agree to what that would be. The hard part is agreeing on what is "reward for efforts" and actually finding the buyer willing to pay that number. The reality is... WISPs are in a business not typically attractive to investors. There are no patents or intellectual property, there is no certainty on competition, who can compete, or unique abilties above the next guy. Success is all about experience and people willing to work in it. Its a market with uncertainty. Its a high risk venture for a buyer to pay cash. The flaw I see with these type deals is they are shooting for the deal that will never happen. Someone has a much better chance applying for a BTOP/RUS grant, with intent to keep their company for 15 years. >We don't want your company.... It's yours and what you built up. We >want to build a common path the more wealth for our efforts. Again, a flawed path. If you dont want the participants' companies, then they are not successful enough yet to attract buyers. Without investment, how will they grow to be attractive to buyers? Profitabilty is not based on increasing national numbers, its about increasing volume locally,to make each local subsidee sustainable for a likely long future. What you really mean is that you do not have the resources to profitable run the local companies without the local company's sweat equity and local staff. What you mean is that you want a peice of their profit, when they sell, in trade for what you give them to help them be more successful. What will you give them to guarantee they will be more successful, so they should share their potential with you? Its possible to organize a group, and simply track subscribers and revenue, and then when the revenues reach a target goal large enough to attract investors, start negotiating deals. But the small entities will never get top ROI with someone else negotiating the terms of their deal. It just doesn;t work that way, we all know it. >That's what contracts are for. If you don't agree with the plan and > the terms, no harm no foul. Its really tough to negotiate a contract that adequately protects the party getting merged in. And even harder to inforce it. And even harder to do it better than a buyer or agregator that has attorneys who have specialized in it for many years, and has money to spend on it. Why must a deal be of a large enough size to be attractive to buyers? BECAUSE THE LEGAL FEES AND DUE DILIGENCE ARE EXPENSIVE. "IF" its a program where no ownership or assets change hands, UNTIL a cash deal (or equivellent considering Tax issues) is presented to the particpant/seller, then it can make sense. Sorry to bash your efforts, just the way I see these things play out. I have very little confidence in aggregation efforts. There are some exceptions. I'm aware of a recent merger that was likely profitable for the entity, but that wasn't an aggregation, it was a strategic move that offered clear benefit to both sides, that would enable increased sales and value offered to future prospects, thus a clear benefit for merging, and worth the risk. The problem with prenegotiated sales is that you ahve to have a large number of people looking to sell. If someone is looking to sell, to the extent that they've put effort into it, they appear vulnerable to the buyers, because they usually have need or large desire to sell, and therefore typically get lower offers from buyers. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband ----- Original Message ----- From: "Marco Coelho" <coelh...@gmail.com> To: "WISPA General List" <wireless@wispa.org> Sent: Tuesday, September 15, 2009 3:20 PM Subject: Re: [WISPA] Aggregate Growth strategy for a public offering Please see within your mail: On Tue, Sep 15, 2009 at 2:01 PM, Tom DeReggi <wirelessn...@rapiddsl.net> wrote: > I'm also not in favor of any deal, that forces a participant into a > destiny > they don't untimately ahve control of, or where they lose control of how > they evaluate their local value when they reach the exit stage. For > example, > one subsidiary may easilly justify a return with a 1x sale, but another > may > easilly be able to justify a 3x sale. When all areas are lunped in as one, > the sale price of teh one has to get averaged out, and those that have > more > value will get underpaid for their value. And when that doesn;t occur, > there > is always in-fighting because everyone thinks there own network is more > value than the next guy's. The way each ISP is being evaluated is based on a formula that take subscriber numbers, income, and gross costs into account. This flattens out the playing field between all players whether they bring in 500 customers or 10K. No control is lost other than agreeing to be in the group and agreeing that if the agreed to price is met they are willing to transition to the next organization structure. Each ISP retains a portion of the new greater organization based loosely on the formula above divided by the overall number of subs the new entity has at critical mass. This makes for a proportionate ownership of the public company if that is the route taken. Note to mention some real money. As we know, in whatever final structure the company takes form as, each area will require basically the same individuals to manage, grow, and support that area. So continued employment should be a non-issue. If you still want to work... That's another question. I would. > > As well, I'm never in favor of a plan that is not very clear on what the > poteital subsidiary gains for joining. Volume discounts rarely translates > to > value anywhere near the value of lossing independant control of one's > company. And we all know, a subsidiary is controlless, unless the deal > allows the subsidiary majority control of its portion, and able to opt out > at anytime proportional to a pre-defined arangement. Volume discounts are just a free benefit. In tier 3 areas, we pay between $50 to $12 / meg for bandwidth, 6-8 for Tier 1, depending on the amount purchased. We also have been successful at getting $0 fiber build outs to our nocs. > . > For a deal to be worthy, they master Company/Buyer must commit what they > are > going to give. For example, most historical deals that ahve failed are > made > simlar to... > "If you make these revenue goals or subscriber counts in X time, we'll > invest this amoutn of money or pay you this amount". This still firces the > aquired entity to assume all teh risk. As I've stated. Each subsidiary remains substantially independent. What we are providing is a path to real financial reward for your efforts. > > For the deal to be good it should be.... " We commit to investing this > amount of cash, and that dollar amount is given in trade for X number of > shares, and that dollar amount is equivellent to the amount of cash small > WISP already invested or greater, and then we all split the upside at X > rate, and small WISP maintains all control until such time that the master > corp makes a contribution greater than the small WISP, and WISP may opt to > accept or deny further investment from Master Corp." > > I can do volume buying in coops without compromising my company ownership. > I can opt into a group aquisition anytime I an ready to sell my company. > > But I just hate the deals that are based on.... Give me your compnay, and > Do > this for me, and in return we'll give this back. It makes no sense. It > need > to be... Give me what I need that I dont have, and risk it, and in return > I'll give you this back. We don't want your company.... It's yours and what you built up. We want to build a common path the more wealth for our efforts. > > >From what I've found Investors always expect to get back much more than > >can > reasonably be acheived. So the small WISP never meets the goals. And > thesmall WISP never gets their return. > This works to everybody's benefit. > When both parties the buyer and seller, both assume adequate risk and > adeqaute contribution, and adequate percent of upside, there becomes a > very > good basis for a deal. > But 90% of all deals fail that basic criteria, and usually end up being > the > reason the effort fails. > > I usually find the buyer's goals are so much grander than the return the > small WISP was willing to operate his business for. > > Deals also tend to work when it merges companies of equivellent size and > value, but its near impossible to protect a joining entity, if they are > not > of equal scale. Their rights just get lost in the wash. That's what contracts are for. If you don't agree with the plan and the terms, no harm no foul. > > The biggest flaw in deals is there is not a compelling enough reason to > make > one large company, other than to plan for an exit strategy sale. And most > WISPs benefit more by staying in the business and living off it for a long > number of years. The money is easy money once the company has reached the > size of profitabilty, why does someone want to sell cheap and start over? > What agregator would pay top dollar, when their goal is to resale and mark > it up? > > The bottom line is, until finance companies leigimately are willing to > take > risk and invest in the companies themselves, at the stage before the > company > has reached scale and needs the cash, they really offer no value. > > > Tom DeReggi > RapidDSL & Wireless, Inc > IntAirNet- Fixed Wireless Broadband > > > ----- Original Message ----- > From: "Mike Hammett" <wispawirel...@ics-il.net> > To: "WISPA General List" <wireless@wispa.org> > Sent: Tuesday, September 15, 2009 2:27 PM > Subject: Re: [WISPA] Aggregate Growth strategy for a public offering > > > I've never been a fan of selling out, no matter the terms.... ever for any > amount of money. That's probably because I'm young and hope to own an > evolution of my company 50 years from now. > > > ----- > Mike Hammett > Intelligent Computing Solutions > http://www.ics-il.com > > > > -------------------------------------------------- > From: "Marco Coelho" <coelh...@gmail.com> > Sent: Tuesday, September 15, 2009 10:34 AM > To: "WISPA General List" <wireless@wispa.org>; > <isp-wirel...@isp-wireless.com>; <isp-inves...@isp-investor.com>; > <wisp-busin...@yahoogroups.com> > Subject: [WISPA] Aggregate Growth strategy for a public offering > >> Aggregate Growth strategy for a public offering >> >> What many think is the holy grail of the Broadband Wireless Internet >> Business is reaching the 100,000 subscriber point then selling out. >> There are a few companies taking the buy-out approach to reaching this >> goal. They are offering between $100 to $1200 per subscriber to the >> owners that have built these businesses up through their hard work. >> They seem to be concentrating on the companies with between 500 and >> 2000 subscribers. >> >> Most of the time, the management of the purchased companies is not >> held on for long after the acquisition, and the quality of the service >> and support for the end user is greatly degraded (a great opportunity >> for us). >> >> We are offering a different path: >> >> What we propose is to band a large group of companies under our >> corporate umbrella. This will be done with very specific limitations >> (for both sides) to ensure all parties are treated equitably. This is >> a no-risk, all-gain proposition! >> >> 1. The companies being added will be subsidiaries of Argon >> Technologies Inc. They will operate substantially autonomously still >> under their respective company structures and management. >> 2. Subsidiaries will be financially autonomous from the corporate >> company. All profits or losses will remain the responsibility of that >> owner-operator. >> 3. Subsidiaries will benefit from the substantial buying power our >> larger entity can offer. We will offer significant discounts for CPE, >> Bandwidth (various providers), VOIP services, PBX services, 24x7 >> Support, Towers, and Tower Access. >> 4. Subsidiaries will be guaranteed a minimum premium for the customers >> they bring to the Corporation. Should we not be able to reach this >> minimum for any reason within the contractual time period, they may >> opt out of the organization at that time. >> 5. Subsidiaries will be encouraged to sell services on each others >> networks. This will greatly increase the efficiency of our marketing >> dollars. If you cannot reach a potential customer with your network, >> and you can on your neighbors, you both profit! How many times have >> your crews been on a new customers roof and only seen the competitors >> access points? Problem solved! >> >> Once our we reach our target subscriber base we will have to decide >> between two different options: >> >> 1. Sell out to a larger corporation. >> 2. Initial Public Offering in the Stock Market. >> >> In either of these two situations, your return on your hard work will >> be multiplied greatly verses a simple sell out to a larger ISP. >> >> Sound intriguing? Let’s talk. >> >> >> -- >> Marco C. Coelho >> Argon Technologies Inc. >> POB 875 >> Greenville, TX 75403-0875 >> 903-455-5036 >> >> >> -------------------------------------------------------------------------------- >> WISPA Wants You! Join today! >> http://signup.wispa.org/ >> -------------------------------------------------------------------------------- >> >> WISPA Wireless List: wireless@wispa.org >> >> Subscribe/Unsubscribe: >> http://lists.wispa.org/mailman/listinfo/wireless >> >> Archives: http://lists.wispa.org/pipermail/wireless/ >> > > > -------------------------------------------------------------------------------- > WISPA Wants You! Join today! > http://signup.wispa.org/ > -------------------------------------------------------------------------------- > > WISPA Wireless List: wireless@wispa.org > > Subscribe/Unsubscribe: > http://lists.wispa.org/mailman/listinfo/wireless > > Archives: http://lists.wispa.org/pipermail/wireless/ > > > > -------------------------------------------------------------------------------- > WISPA Wants You! Join today! > http://signup.wispa.org/ > -------------------------------------------------------------------------------- > > WISPA Wireless List: wireless@wispa.org > > Subscribe/Unsubscribe: > http://lists.wispa.org/mailman/listinfo/wireless > > Archives: http://lists.wispa.org/pipermail/wireless/ > -- Marco C. Coelho Argon Technologies Inc. POB 875 Greenville, TX 75403-0875 903-455-5036 -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
