ISPCON: Don't Get Greedy, Says Tom Millitzer

My introduction to this Fall ISPCON's program, and one of the sessions in the 9:00 a.m. opening slot, was a presentation delivered by Tom Millitzer – M&A expert, president of New Commerce Communications, WHIR blogger and all-around entertaining gentleman.

I have my suspicions as to the freshness of the material, which seemed like it may have included parts of previous presentations – not because it was dated, but because it was a very sort of general-purpose primer to buying and selling ISPs. Also, Tom said parts of it were from his presentation at FISPA last week.

But I've never seen Tom present at an event like this before, so the freshness of the material is really beside the point

The presentation, "Positioning Your Internet Company for Sale - and Making More Money," was, unsurprisingly, a discussion of the ins and outs of selling an Internet company. And Tom, who makes his living helping companies with this sort of transaction, makes it sound simple enough.

Rule number one, for instance, is "be honest." There's a process a buyer goes through, which he describes in a series of categories labeled: identify, qualify, value, negotiate, structure, validate, close, integrate.

Never having personally bought or sold a company, I am nevertheless able to make sense of those categories intuitively. As a seller (which we'll assume you are for the sake of this blog post), you'll want to make yourself apparent to the buyer as early in that process as possible – around the "identify" or "qualify" stage. That makes a lot of sense too.

In fact, the process of selling a company ends up sounding awfully similar to the process of selling a product. That is, you have to identify your buyer. You have to figure out exactly what it is they want. You have to work to position yourself in that light. And you have to put the product in front of that buyer in a way they're going to appreciate.

Interestingly, Tom says the "big secret" about this sort of acquisition (and I feel I should stress here that he made an awfully big deal about the secret) is that "greed tanks more deals than anything."

Tom says he's seen more deals fall apart as a result of either the buyer or the seller getting greedy (and it goes both ways, he says), than for any other reason.

In the seller's case, they may decide after negotiating a deal almost to its conclusion that they want to raise the price. Or they may assume too soon that they've concluded a deal that isn't quite done. 

For the buyer it's much the same. Greed, as he sees it, can mean becoming so enamored of the idea of being somebody who makes deals that they start pushing the price down just to see if they can do it.