[isp-investor] RE: isp-investor digest: February 20, 2004

["Bob Smith" <smx@...>]

Of course it does!  Just like if I pay a painter to paint my house and he
dies before painting it.

The problem with the term "deferred revenue" is that it SOUNDS like you have
performed a service and that the customer has not paid you yet so the
revenue is deferred to some other later time. Kind of like "prepaid
expenses".  I too like the term "unearned income" much better as it's less
ambiguous to a non-accountant.

Bob
----- Original Message ----- 
From: "Ed Larson" <edlarson@....net>
To: <isp-investor@isp-investor.com>
Sent: Tuesday, February 24, 2004 4:15 PM
Subject: [isp-investor] RE: isp-investor digest: February 20, 2004


> Real-To:  "Ed Larson" <edlarson@....net>
>
> 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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