Top 7 Things To Do Before You Sell Your ISP

You've made the big decision: It's time to sell your ISP and cash out. But first, there are lots of small things you can do to guarantee maximum return on the asset you've spent so many years building. We'll explore the seven most important.

by Christopher M. Knight [June 1, 1999]

1. Decide your post-ISP strategy up front.
It's far easier to negotiate when you know clearly what you want, how you want to exit, what kind of ISP you want to sell to, what you want to do after the sale, and how you want to handle the marketing engine you've created that will continue giving you new dial-up subscribers even after you have made the sale.

2. Identify key potential buyers for your ISP 3 to 4 months before you plan to sell.
It's better to have offers in the hopper at least 60 to 90 days before you want to sell, than to find out that you can't sell your ISP on a week's notice. A great resource for identifying the key players in the ISP buying/selling mergers-and-acquisition game is the ISP-Investor E-mail discussion list (currently with over 1,700 members). You can join the ISP-Investor list by sending an email to: join-isp-investor@isp-investor.com

3. Clean up your database and make sure you have a firm count of paying subscribers.
This includes making sure that every single user who is dialing up your servers is a paying client. It's not uncommon for small ISPs (under 3,000 in size) to have hundreds of subscribers who have fallen through the cracks and are non-intentionally freeloading, because your billing system has holes. I've known ISPs who discovered—after they'd sold out and shut down their access switches—that they had as many as 400 more customers than they thought. As you can imagine, this was not a pleasant surprise.

4. Encourage your subscribers to pay by credit card.
Subscribers that pay via credit card are easier to work with, cost less to administer, and tend to fetch higher valuations than those billed monthly via snail mail. Consider changing your payment policies, either charging for paper snail mail invoicing or simply discontinuing snail mail billing for all noncorporate clients.

5. Check your Accounts Receivable and make sure that you are disconnecting folks who have not paid you for 60 or 90 days.
It will be very hard to collect from them after you have sold out; it's far better to take the trouble and tighten up your disconnect notices. From experience, my recommendation is to send disconnect notices after 30 days past due as a friendly warning. Then Send a 7 day disconnect notice on the 60th day past due, and FOLLOW THROUGH on your warning by actually disconnecting them on the 7th day.

6. Investigate your termination liabilities with your telco.
You don't want to get caught with your pants down, owing tens or hundreds of thousands of dollars of early term disconnect fees. If you sell to a telco, you may be able to get the circuits transferred, so it's worth investigating a bit to save yourself a lot of $$$.

7. Consider the rest of your operation in the big picture.
You may be able to get more money overall if you sell your web hosting and design business along with your ISP. What are your plans for your existing employees? Will they transfer to the new ISP? What about your ISP hardware? Can you make more money by including it or by selling it separately? Will the new host even want it? Is there some areas that you should consolidate some POPs to trim your ISP to be more attractive to the needs of an ISP buyer?

While not all of these 7 will be right for everyone, they should at the very least give you some ideas to get you thinking—and some action ideas to implement within your ISP business, even if you're not selling it.

To Your ISP Success!
Christopher M Knight

PS: I'm interested in feedback.