Knowing the Right Time to Sell- Keys Questions to Ask
by the Grimes, McGovern & Associates Team with an assist from the National Federal of Independent Businesses
Your publishing business hasn’t made the money you thought it would. Or the opposite may be true: Your business has been lucrative beyond your wildest dreams and buyers are chomping at the bit to take it off your hands.
Maybe you’re itching to spend more time with your family and friends and your heart just isn’t into it anymore. The economy has turned your business upside down with no clear path to recovery. Or perhaps new digital technologies have gotten beyond your grasp. Maybe you’ve hit the age when you’ve always planned to retire, so that’s that.
Small-business owners put out the “For Sale” sign for all sorts of reasons — all of them unique and personal. There is no surefire way to tell if the time is right for you. Instead, you must take a close look at “your baby” and your life and decide if it’s time to let someone else take over the business you’ve grown.
Are you the right owner for this business moving forward?
Do you still have the personal drive, the perseverance, and are you ready to commit the resources needed to propel your newspaper forward? Are you and your staff capable of moving your company into the digital age? If not, are you prepared to bring in the talent and turn over the reigns to those folks who can? A ‘no’ to any of these questions, and it’s probably the time to sell.
- Do you know the value of your business? Get it appraised before you start taking offers. Grimes, McGovern & Associates offers a free, confidential appraisal to all potential sellers. Call us today at (301) 253-5016.
- Consider the market factors. How profitable was your business for the last few years? What do your revenues and cash flow trends look like going forward? As the economy improves, will your advertisers march back into your paper? Are digital platforms financially viable? How is the health of the newspaper industry in general going to affect the value and salability of your business in the future? Can you wait for buyers to jump back in the market? If so, will buyers be able to see from you, a clearly more valuable product backed up by strong financial performance?
- You need to consult an advisor. They can identify and help you take steps to make your business more sellable. Make sure you have a good understanding of everything that will be involved in the selling process and decide whether or not the time is right to undertake this major change.
- While it would be ideal to find a prospective buyer who will give you payment in full and send you off on that long-awaited world cruise, that particular buyer may be hard to find. With most of the major groups and a large number of strategic buyers still sitting on the sidelines, the number of potential buyers for your publication has dwindled. Though valuations for newspapers have experienced a significant increase over the past year, they are still a low way from the peak of a couple years ago. And now the valuation metrics have changed. Plus, bank financing remains hard to secure (though it has improved dramatically the past 18 months).
- Many sellers now finance some portion of the sale for their buyer. Are you in a financial situation where you can receive an initial down payment and then make due with a slow payoff? In this case, it will usually take between five and ten years before the buyer pays you off completely.
- Using this scenario, you still have a stake in the business for the duration of time you’re receiving payments. If the new owners don’t do a good job of managing the business, you may not receive all of the money coming to you, unless the buyer has other assets (certainly not a given) used as leverage when you signed the deal. Some owner financing allows you to keep a hand in the business to make sure the transition is a profitable one. So if part of your fantasy about selling your business is washing your hands of the whole thing, it might not pan out exactly as you’ve imagined.
Before you plunge ahead, ask yourself why you’re selling your business. If running a newspaper has become synonymous only with headaches and hassles and you can declare imperatively that you’re ready to get out… then realistically, it’s time to sell.
Most publishers though, feel more conflicted and need to take a closer look at why they want to get out. If for example, you can secure a fair monetary offer, think about how your life will change once you no longer own your business. Does your business give you your sense of purpose? What will replace that? If you enjoy your work, where will you find a similar sense of pleasure? You need to give serious thought as to what life will be like without your newspaper, whether you really want to retire or work elsewhere.
This will be one of the biggest decisions of your life and you don’t want to leave your business rashly. Taking time with the process should help you figure out if and when you really want to say goodbye.
Considering a sale of your newspaper? Let’s talk.
Let’s set aside a few minutes to confidentially review your own situation. Let me help you take those first steps in analyzing your newspaper’s value,. Let’s review your operations, the numbers, and your market.
I can offer you some concrete market intelligence. We can discuss who is buying, how today’s deals are being structured, who’s lending, and whether it makes sense to begin the sales process now, or wait.
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