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Thread Index [isp-investor] RE: isp-investor digest: February 20, 2004
I can't believe that after all these years there are folks still arguing if
deferred revenue or more accurately unearned income is a liability or not...
To those that think it is not a liability try this on, you give an attorney
a $1,000 retainer for x amount of services and the attorney dies with
performing any services for you. Would you say that the attorney's estate
owes you $1,000.00? da...
Ed Larson
National Sales Manager
edlarson@...
Dial-up, DSL, Satellite
VOC 1(563)588-6266
FAX 1(563)583-6623
-----Original Message-----
From: Martial Herbaut [mailto:martial@...]
Sent: Tuesday, February 24, 2004 2:22 PM
To: isp-investor@isp-investor.com
Subject: [isp-investor] RE: isp-investor digest: February 20, 2004
It seems this list is full of potential buyers who are trying to put their
perspective accross. What ever happened to looking at revenue history,
whether montly or yearly revenue, and revenue projections...? You can't go
deducting prepaid amounts from the sale for the simple reason that there
is a customer acquisition cost that the seller must be compensated for
since those accounts will provide a nice steady revenue for the buyer, not
even mentioning the referal power of those happy long term customers.
There is no right or wrong way to calculating these transactions, it all
comes down to what the seller is prepared to sell for and what the buyer
is prepared to pay to acquire the businnes. A Win/Win transaction is what
everyone should attempt to strive for and how that is achieved depends on
the business for sale and many other factors.
>
> With all due respect, you are quite incorrect. The buyers 'cost to
provide
> access' has nothing to do with the deferred revenues calculation. It does
> factor into other considerations, but not deferred revenues.
>
> As for the person who just posted that their buyer does not deduct for
> deferred revenues, that is highly unlikely (or foolish). My guess is that
> they simply offer a lower multiple to start with.
>
> To expect a buyer to pay full price for a sub that has already paid the
> seller is not realistic. The seller either has to turn over the deferred
> revenues as cash, or the amount must be deducted from the sale.
>
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