What do investors look for in an ISP?
Have you ever thought about selling your provider?
During 2021, mergers and acquisitions in the telecommunications sector hit a record. Such growth has aroused the interest of several investors in the segment, especially with a focus on internet providers.
But what are buyers and investors looking for in a provider?
The interests of a qualified investor
The interest of the most qualified investor, who seeks regional providers for consolidation, passes through a few points.
When purchasing a provider, one of the important points is the speed to turn operation. The company that was purchased will need to join the work model of the company that acquired it, and do so quickly. and have a partner company that help the ISP at this point is essential when dealing with network data, whether in the documentation or import process.
Documentation and organization are important things for anyone interested in buying an internet provider.
Another important factor is the return on capital. An investor always tries to choose well the projects he is entering. Evaluates the demand potential, the return potential and the investment need of the area in question.
In the case of the telecom market, projects without scalability and without a cheaper purchase, can start to leave the scene in a competitive scenario like the one that has been created. we had a boom recent growth in the number of providers, with acceleration a few years ago, and it is natural that there is now a consolidation. And in the relationship that involves a loss of margin and an average ticket that does not grow, the process of investing in an ISP today needs to be judicious.
Service quality is paramount
At the same time, another point evaluated is having the differential in the service quality. If the provider is able to stand out in this aspect and offer a more stable product, with better service and a direct interface with the customer, the first stage of return on capital is optimized. This structure in operation manages to make the provider cover more, increase average ticket, have less churn it is a takeup larger.
The investor will always account for the best allocation of capital to where you have the highest possible return, and mainly to try grow organically with an accelerated return on capital. Therefore, this involves choosing acquisitions with a higher average ticket and being able to make a quick integration, for example.
So, after all, what is the investor worried about when acquiring an internet provider?
Speaking of the reality of ISPs, the investor is concerned about its ability to continue growing.
Equity funds that buy shares in the IPO already understand the industry, and want to know about network quality, network documentation, tax structure, how the company compares to the big telcos. They are market-educated investors who place greater value on organic growth than inorganic growth. So, if you have a model to grow and go to the next city with a good return on capital, the interest and the probability of being able to sell the project becomes greater.
In addition to planning to enable organic growth, the decision to go inorganic through acquisitions also requires a clear plan for integrating, training and uniting processes into a single company. The investor's fear is having a patchwork quilt: several different operations under the same company. Acquisitions have to be made consciously in order for them to have value, and having a company that shows the investor a winning business model in the long term is key.
Count on OZmap at both ends of the M&A process
If the provider has OZmap and is buying a company, we import everything quickly and correctly from several other systems. And when the provider is being sold, it can assure the investor or buyer that it has a system that prepares the data effectively, and exports it wherever that data has to go.
Count on DevOZ to handle the data needed in your M&A process, whether you're on the seller or buyer side.