What No One Tells You About Selling Your ISP

Show notes

A few weeks before this episode, Bandwidth covered mergers and acquisitions. This time the conversation moves to the seller's seat: how you decide who to sell to, not just for how much.

Georgette Lopez-Aguado is joined by Rick Seemann and Larry Weidig, who have both been through the sale of an ISP as operators. They talk about evaluating buyers, keeping the deal quiet, what changes when the buyer is private equity, and the advice they wish they had heard earlier.

Choosing a Buyer, Not Just a Price

If the buyer is another ISP, Rick's advice is to do your own diligence on them. They have probably bought other ISPs, so reach out to those former owners and ask how it actually went. If the buyer is private equity, they should be able to explain their thesis and be glad to introduce you to other companies in their portfolio. If they are not willing to do that, he called it a huge red flag.

Larry, who sold his ISP to another ISP, described it as a two-way street. Under NDA he handed over his data and asked for the buyer's data too, because he wanted to know the deal would not evaporate. Many sales are not all cash up front, so you are trusting the buyer to run the operation well enough to finish paying. He shared a cautionary example from early in his career: a provider that sold in an all-stock transaction with a one-year hold, to a company that went bankrupt within that year. They effectively sold their business for nothing.

Georgette added that a sale is not always the whole company. She is seeing operators sell a geographic footprint, or the fixed wireless side of the business while they convert to fiber. The same care about who the buyer is applies.

When Staff and Customers Find Out

Larry's answer was that you do not tell staff or customers until it is a done deal. His team found out the day of, which surprised him given how many town meetings he had attended to get lease transfers approved. From that day on, communication has to be constant.

Rick's view is that you cannot overcommunicate. If your plan feels like overkill, double it. He also described the cost of secrecy. Close to closing, the company's commercial vehicles had to be re-inspected to transfer ownership, and he had to invent an explanation for staff. It was the first time in the process he had to lie to people's faces. Once the news was out, he doubled down on sincerity, apologized, and was careful to share only what he was certain of, because anything you get wrong will be held against you.

Larry called the hiding probably the worst part of his entire ISP career. Customers could be reassured through steady communication that the buyer shared the company's values. Staff were harder. There were tears that day.

Private Equity vs. a Competitor

Rick laid out the main difference. A larger ISP buying a smaller one usually does not need the owner afterward. Private equity often does. They are investing because the business is doing well, and they may need you to stay on and lead. That can mean more accountability than you had as a founder and much less input. Going from owner to employee is a real culture shock.

Larry noted that a competitor will usually absorb your brand, while private equity may keep the name if it has strong recognition. The diligence is also different. A competitor wants to know how many towers and subscribers you have and what hardware is out there. Private equity will want far more reporting, process, and documentation. Rick added that a tier one buyer brings similarly invasive diligence. If you have skeletons, they will find them.

Georgette pointed out that not every sale goes through. She sees deals under a letter of intent fall apart because the buyer cannot raise the capital or the seller changes course. That is one more reason the circle stays small until the deal is real.

Advice Before You Sell

Larry: look hard at your reasons and make sure they are solid, and have a plan for what comes after. He ended up exactly where he intended to be.

Rick: understand the full range of options first. Scaling a business is like a staircase, and a big step in front of you can feel like a reason to quit. Selling may solve that, but if you were not actually done, you carry the regret. A partial sale, outside funding, private debt, or the right private equity partner can get you over that step while you stay part of the story.

Georgette raised succession planning. If something happened to the owner tomorrow, does anyone know the plan? Is it key person insurance and closing the doors, or is the business an asset the family could sell? For Larry this was one of the big factors in his decision. The company was not large enough for the staff to absorb his role, and he did not want everything he and his wife had built to be wiped out. Rick's point was that if a sale is this hard for a founder to navigate, a family member who was never involved has little chance of doing it well. Write the plan down.

Love It or Hate It

Every ISP has a price. All three loved it, with caveats. Larry knows an operator who would run the business into the ground before selling, and having a price does not mean anyone will pay it. Buyers rarely pay over market. Rick's takeaway: even if you are not looking to sell, hear the offer out.

Holding on too long is worse than selling too early. All three loved this one too. Larry turned down an offer in the dial-up era because he was not ready. Rick said the timing of his company's exit proved right even though the team was not emotionally done. And as he put it, when you sell, some people may lose their jobs. If you run the company into the ground, no one keeps their job.

Customers don't care who owns the company. This one split the room. Larry loved it: customers care about how they are treated, and anyone who shares your values can earn that. Georgette hated it: people do business with people, and they care that the owner is invested in the community. Rick sided with her, because some share of subscribers will always choose the local, family-run provider even when everything else is equal.

What If Your Network Is Aging?

Should you upgrade before selling to raise the valuation, or sell as is? Larry's answer was to do the math. A buyer will see the capital investment ahead of them and price it in. If you do the full upgrade yourself, you take on all the risk and may not raise the valuation enough to justify it. His team took a middle path: they began moving to newer wireless gear and could show buyers a documented plan with costs and a rollout timeline, which had value on its own. Rick added the limit: if the network is falling apart, it will not survive due diligence, and you may have to upgrade out of necessity.

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