Keys to Maximizing the Return on the Sale of Your Publishing Business
The number of buyers for strong niche publications continues to far outweigh the number of solid properties for sale. Sales prices remain near their historic highs with multiples ranging from 5 to 8 times cash flow. Attaining top dollar for your property can be as simple as following a few basic rules.
Keep Good Records
This is one of the most common mistakes sellers make. Buyers want to see detailed financial records for the past 3-5 years and as far into the present year as feasible. P&L statements are best, the more detailed those records by line item the better. Be able to provide data by publication. Have a thorough understanding of what resources are being allocated to what profit center.
Track ad pages per issue for your publication and your competitors. If you have a paid subscription product keep track of promotional response rates for every list and package you test. Be able to detail conversion and renewal rates by issue and maintain detailed advertiser and subscription lists. Have available sell through data for any newsstand sales. Know your subscription liability. Make sure your circulation management and accounting systems are in great shape and that you can provide the types of MyCompany Quarterly Reports a buyer may request. File your tax returns on time. The “Red Flag” goes up when a Seller files for an extension.
Understand the Value of Your Publication-Price It For the Market
Have an objective third party assess the re-sale value of your publication. Take all your emotion out of the valuation. Understand what publications of similar size, revenue and cash flow, market dynamic and position are commanding in today’s marketplace. Understand who’s making the deals for publications such as yours and how those deals are being structured. Buyers are looking for a return on their investment and typically beginning in year one. Potential is a compelling reason to buy, but, in the end, not a means for paying more.
Create A Publication That Can Be Easily Transferred
Buyers want that “peace of mind” that your publication can be easily produced by their own staff or what will remain of your staff after the sale is completed. This is especially true on the editorial and advertising sales ends of the business. If your name or a key employee is synonymous with the business, it’s a good idea, and well before the sale, to put in place an infrastructure that will ensure the title(s) can stream along without that individual. Understand, that if the product requires an editor with specialized qualifications your universe of buyers may be limited to those already that field. If you’re handling the great majority of the advertising sales be prepared to devote 6-12 months to the Buyer grooming your replacement and ensuring those ads will not walk out the door upon your departure.
Understand the Tax Implications of Your Sale
Good tax planning is essential and well before you offer your publications for sale. Consult with your accountant and financial planner to explore the optimum way to potentially structure your transaction. There may be tax advantages to offering seller financing, providing on-going consulting services, changing from a “C” to an “S” Corp.
Run the Business If It Were Not for Sale
Continue to promote your business. Actively pursue new advertising accounts and subscribers. Keep your circulation audits up to date. Buyers are looking for predictability and avenues for growth. This is not the time to show a fall-off in sales or to cancel a marketing campaign. Run the business the way you’d run it if you were the buyer.
Hire A Broker
Selling a publication requires an ever-increasing level of sophistication not to mention a great deal of time. Most publishers do not have access to the broad range of publishing and financial buyers that an experienced broker will bring. They don’t have experience structuring transactions that meet the increasingly complex business and tax needs of today’s buyer. Selling a publication is very time consuming. An offering memorandum must be drafted. Buyers must be located and cultivated. Additional due diligence materials must be gathered, questions answered. Negotiations can be complex. In most instances it makes sense to have an intermediary in those negotiations.
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