One-time asset sales agreements are common for block trades involving 262,144 numbers or less. Larger deals can include options, installment payments and phased delivery, seller or third-party financing and other creative value enhancing features like allowing the seller to take a portion of the purchase price in the form of credits that it can use to offset purchases of unrelated enterprise services supplied by the buyer.
Familiarity with the specific RIR's registration transfer policies, before starting negotiations, is also essential to a buyer's success. Both ARIN and APNIC, for example, expressly allow potential buyers to pre-qualify for block sizes under their needs-based transfer policies — thereby alleviating at least some uncertainty in the registration transfer approval process.
2. Vet the advisers
If either buyer or seller decides to enlist the assistance of a broker, adviser or other form of intermediary, they should test the broker's experience and understanding of the industry by interviewing multiple brokers, and researching the credentials and backgrounds of the firms' professionals. Getting references in this business is tough; no one wants to go on record.
The brokerage or market services agreement should clearly describe when the intermediary earns its fees and when those fees are payable. The service agreement should also disclose whose interest the broker represents, including whether it receives any form of compensation or fees from counterparties it presents to its clients. Setting and documenting expectations up front will help avoid disputes down the line.
3. Conduct informed due diligence
Immediately upon initiating discussions involving a possible trade, the prospective buyer or seller should sign a mutual confidentiality agreement and conduct their due diligence. Buyer due diligence begins when it obtains from the seller or its broker the specific designation of the available IP address range. The buyer should first verify that the prospective seller is an active organization in good standing by checking the records of the secretary of state where the company is organized, examining corporate credit ratings and, for publicly traded companies, reviewing recent SEC filings. Buyers should also confirm that the selling entity is in fact the current registrant or a legal successor of the listed registrant by investigating the RIR registration records for the IPv4 space being sold, and confirm that the individual purporting to represent the seller is authorized to act on the seller's behalf.
A buyer should also require its seller to disclose material facts about the block for sale, including whether any of the numbers are currently in use, if any third-parties have made a competing claim to control the block, or if there are any known inaccuracies in the RIR registration records. More technically sophisticated buyers may even analyze the reputation and prior usage of the numbers in the available block. Thorough due diligence may involve even more comprehensive written questions presented by the buyer to seller.
Sign up for Computerworld eNewsletters.