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Paying for IPv4 Addresses

Published on October 28th, 2014

IPv4 Market Group is frequently asked how a buyer can pay a seller for IPv4 addresses.  In the early days of IPv4 transfers, in 2011-12, IPv4 transfers were less common than today, and IPv4 transfer participants felt some uncertainty about both the commercial and legal aspects of an IPv4 transaction.

Today, with hundreds of transactions having been completed by ARIN, RIPE, and APNIC, the legal and practical aspects of an IPv4 transfer are well defined and assured.  This has lessened the uncertainty around the financial aspects of an IPV4 transfer.

As a result, IPv4 Market Group now sees many forms of payment offered by a seller to its buyer:

1)   The seller may accept credit, with payment net 15 to 60 days after the transfer, depending on the buyer’s credit risk and the seller’s typical accounts receivable payment terms.  IPv4 addresses are treated like any other receivable in the “payment for services” cycle.

2)   Many sellers use escrow.  IPv4 Market Group offers US Bank for many USD transfers, Ratio Law for many GBP transfers, and escrow.com for small Euro transfers.  When escrow is used to increase the comfort level of buyers and sellers, IPv4 Market Group pays for the cost of the escrow.

3)   Some buyers and sellers negotiate a letter of credit payment between their respective banks, with the buyer’s bank honoring the letter of credit for settlement through the seller’s bank upon presentation of the proof of transfer in the Regional Internet Registry.  This method is typically used in the Middle East and Europe for transfers of /14 and larger.

4)   We have seen promissory notes issued where part of the purchase price is paid at the time of transfer and a second part is paid via a promissory note, which may be paid in six to twelve months time.  Interestingly, these notes are backed using the IP’s as collateral, and can be bought and sold.

IPv4 transactions can be straightforward: once an asset purchase agreement is signed, the IP’s are transferred, and one of the aforementioned payment methods is executed in a very simple manner.  Obviously, when IP’s are transferred in several tranches, with several payments, a letter of intent, and successive asset purchase agreements or steps, things can get very complex.  Regardless, IP’s are now being treated much like any saleable asset, and as a result, typical asset payment methods are available for IPv4 transfers.