Even if you aren’t thinking about selling your media business right this minute, it’s usually an important future consideration. Or maybe you’re thinking about selling just a part of your portfolio. You can never start preparing too soon!
We checked in with some of our top M&A experts to get their insights on some good guidelines when contemplating the sale of (some or all) of your niche media properties.
Three smart steps niche publishers should take before they begin the selling process:
Dan Oswald, CEO of Simplify Compliance:
- “Make sure you’re really prepared to sell. Many niche publishers think they want to sell until they get far along in the process and they get cold feet. It’s hard to let go of your “baby,” so make sure you explore the emotional side of selling, not just the logical or financial. Sometimes the number of logical buyers are limited. You don’t want to have too many false starts with a limited audience.
- Get your financials in order. Buyers want to see clean, accurate financials going back 3-5 years. Many will price your business based on a multiple of EBITDA, so if your financials show that number it will make things go better. Spend a little money to have a competent accountant help you put them in order.
- Hire someone reputable to represent you. In the end, no matter how much you prepare yourself for the emotional side of selling, it’s going to be a tough process as buyers look for every flaw in your business. Having outside representation to shield you from some of this and to help you keep the process competitive is important. If you’d hire a realtor to sell your house, why wouldn’t you hire a representative to sell your business?”
A key benchmark to help niche publishers understand how they stack up to other comparable media companies:
Jim Zielinski, Founder of Zielinski Financial Advisors, LLC:
“The most important benchmark is revenue per employee. Revenue per employee is the most key basic measure because it fundamentally incorporates the entire P&L (Profit and Loss) in one number. In media businesses, staff payroll and related expenses account for the majority of total expenses.”
In the brave new world of M&A, what are some valuations that in the old days weren’t really a consideration and now are very important?
Don Pazour, CEO of Access Intelligence:
“The level of engagement your audience has with your brand. It has always been important, but with today’s digital metrics, it is easier to prove and demonstrate.
If you happen not to have fully developed the digital extensions of your brands, that is value and growth available to the buyer. It is a strange kind of making lemons out of lemonade. Always remember most buyers think they are smarter than you and can do better than you did with your brands and products. Use this to your advantage.
Digitally savvy teams in all areas of the business—well beyond your “IT” staff–editors, sales people, audience people should demonstrate competency and internal tracking of measurements that fully leverage the digital media ecosystem for the sector in which you publish.”
With this wisdom from the experts in mind, check out the 2017 Niche CEO Summit in Washington, D.C., June 21-23. It’s an event just for Publishers and CEOs who want to learn more from their peers and niche media industry experts, and includes B2B- and B2C-specific sessions on M&A. Join us!
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About this blogger: Diana Landau is the Content Wrangler for Niche Media. A former sales director and corporate marketing hack, she has now found nirvana in writing and wrangling quality content. Diana is a food, wine, art and SF Giants enthusiast…who sometimes gets carried away.
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