IPv4 Broker Due Diligence

Doing due diligence before you buy IPv4 addresses is a critical activity.  Here are some tips on things to consider:

When an IPv4 broker responds to your IPv4 RFQ, you want to ensure the broker has IPv4 addresses to actually fulfill the bid.  Otherwise you may be in for a long delay while the broker scrambles to find a seller.

Some IPv4 brokers charge both buyers and sellers in a transaction.  I call this practice double-dipping and it can place the broker in a conflicted position.  You might want to verify that the broker only represents one party and ensure that the broker is acting with an ethical approach.

After execution of an NDA (non-disclosure agreement) with the broker and seller, the broker should disclose the seller and the range of IP’s, and you should be able to do due diligence on the IP’s.  You can verify the seller’s rights to the IPv4 range, as well as the integrity of the IP’s to ensure there is no IPv4 blacklisting or blocking.

Sometimes if a price is much lower than any other prices you have been given, it is too good to be true.  You might want to find out why, and be justifiably suspicious.

IPv4 price is not everything.  Also pay attention to other variables such as payment terms (is your money protected through the transfer by a legitimate third party?), what legal jurisdiction will be used for the contracts (is it a court of your preference), or, are other party approvals needed (such as other RIR's and 3rd party interests in the IP's).  Process can be as important as price.  Tried and true documents such as asset purchase agreements, escrow agreements, and bills of sale are critical.

Check the experience of the broker.  How many transfers have they done?  Have they done transfers in the jurisdiction and of the type you are attempting?  It is important that you find the broker to be trustworthy.  You should be confident that the broker is telling you the reality of your situation and not an answer that is self serving.

If you are interested in buying in the ARIN or APNIC region, your broker should be able to assist you in understanding your pre-approval requirements, so that you have 100% certainty of transfer once the commercial agreement with the seller is executed.

Here are some questions to ask so that you can test your broker:

• Do you use an escrow process for payment?
• How much does escrow cost and do you pay this cost?
• Who will hold the escrow?
• Do you have a seller with the IP’s I need in inventory? At what price?
• Can I see your Asset Purchase Agreement, Escrow Agreement and Bill of Sale?
• How many transfers have you done?
• Can you provide buyer references?  How many IPv4 addresses did they buy and when?

I hope these points will aid you in testing the honesty, knowledge and experience of IPv4 brokers.