New Commerce Communications' mission is to help internet companies find buyers, and to take the time to do it right.

by Jeff Goldman [June 14, 2006]

Cape Coral, Fla.-based New Commerce Communications, or NCC, was founded in 1993 to broker mergers and acquisitions in the cable industry, but soon shifted its focus to Internet companies. "Since 1998, all we've done is internet," says company President Tom Millitzer. "We've done about $300 million worth of transactions, mostly with independent Internet providers."

For an owner of an ISP, CLEC, WISP or other Internet company who's looking for help in selling their business, Millitzer says, a few key factors should help them pick a broker. Experience and knowledge of the business are crucial, of course, as is a clearly defined commission schedule. "They should not look for somebody that wants up-front fees," he says.

New Commerce Communications 5909 Tarpon Gardens Suite 101 Cape Coral, FL 33914 Voice: (239) 945-4616 Fax: (414) 755-1440 Web contact form

Millitzer says his company's goal is always to get as high as price as possible for its clients, of course, but within the range of the market. "We don't get paid unless we get a transaction done, so if somebody wants way above what the market realistically will pay, we're not going to work with them," he says. "People have to be realistic."

Similarly, Millitzer says NCC won't work with a company that's in financial straits. "They end up being problem transactions, so it doesn't do us any good or the buyer any good—because, frankly, problems beget problems," he says.

NCC's key focus is on companies valued from $2 to $6 million, though Millitzer says they do transactions ranging from $500,000 to $20 million. In most cases, NCC's fees range from 3 to 6 percent, depending on the size of the transaction. "We'll charge up to 6 percent for smaller transactions, but typically, it starts at 5 percent and then works its way down," Millitzer says. "We're working on a transaction now (it's a $12 or $15 million transaction) that'll probably be a 2.5 percent fee."

Keeping it simple
NCC is still a small company—just three people—which Millitzer says ensures that all contact with both buyers and sellers is as straightforward as possible. And the company only works with ISP clients on an exclusive basis. NCC only represents sellers, not buyers, and expects the same commitment in return. "We have an exclusive agreement, and we only get paid if we get the transaction done," he says.

The process starts, Millitzer says, with preparing the company for sale. That can involve anything from helping them simplify their rates to helping them focus on key product lines. A company that's focused on a single solution, he says, is far easier to sell than one that's selling, say, wireless, dialup, web design, and webhosting to business and residential customers. "The company that's trying to be all things to all people does not generally do well in valuations any more," he says.

NCC then creates a detailed and confidential memorandum that outlines the company's high points. "It's our goal to have a document, usually anywhere between 20 and 60 pages, that in less than five minutes the CEO of the company can use to decide if they want to go further," Millitzer says. "And whoever they give it to—the financial people, the technical people—can, in five minutes, basically know what the company is. It gives them a high-level due diligence platform to work from."

NCC then markets the company, starting from its own database of approximately 2,000 potential buyers. "We work off that database, and research new companies that meet the criteria of the company we're representing," he says. "Some companies have geographic areas, some people have sector areas. Some people don't want anything that has wireless; some people want a lot of wireless."

Why use a broker?
There are three key reasons, Millitzer says, for an ISP to work with a broker like NCC: an objective viewpoint, packaging, and relationships in the industry.

"We can look at the company independently, and really see the warts—and, often, the positive things—that they may not understand or even see," he says. "And we package the company in a format that buyers have seen before, and that they're used to seeing."

The relationships NCC has developed within the industry, Millitzer says, are really its greatest strength. Beyond that, it's all about marketing the company that's being sold, and coordinating the timing of offers. "We can often get a number of offers on a company over a two week period," he says. "If you did it poorly, you could get the same number of offers, but over six weeks. It's our goal to give the seller something to compare offers with, and to create at least some sense of urgency for the buyers."

The other aspect of timing, Millitzer says, involves not rushing the transaction. "A lot of the transactions we work on, we've actually been working with the seller for several years," he says. "We'll have conversations regarding their rates and their business and where they should be in the marketplace—hand-holding, in a sense."

The point, Millitzer says, is that there's never any reason to rush. "When you sell a company, it's just not a quick decision," he says. "It's a life-changing decision, it's a financial decision, it's a what-you're-going-to-do-next decision, and we will work for a long time with some people until that decision is right for them, or their company is prepped for sale."

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