Before you take one (or all) of your media properties to market, you need to be fully prepared. And getting all the facts and expert insights is key. But what information is the most important?
Here are 5 questions you need to ask — and know the answers! – before you jump into buying or selling.
- What are buyers looking for in media companies?
- How do you correctly value your company?
- Do you have the numbers you need to buy or sell?
- Do you know the parameters about closing the deal (and the fine print)?
- What are the current M&A (Mergers and Acquisitions) trends and road bumps in the media marketplace?
We asked John McGovern, (CEO & Owner, Grimes, McGovern & Assoc.) to share some of his insights on getting ready to sell and close, plus M&A trends to watch.
What are some good guidelines for niche publishers to correctly value their company?
JOHN: “The most accurate way is to try to come up with contribution by revenue type. This requires precision analysis of direct costs and overhead/shared costs. From contribution, you can get to EBITDA by revenue type.
Then we can build a proper valuation estimate by applying higher multiples to growing, more profitable parts of the business – like events, subscription, some digital. This is all in the category of having very clean financials that the owner understands like the back of their hand.”
During the close phase–can you share some pointers on getting the fine print right?
JOHN: “The most important things are to rely on your lawyer and M&A advisor, bring someone into the process who can answer questions and pull reports….. then stay focused on the business so you meet the projections that you gave your buyers at the start of the process.
Re: actually closing, work with your M&A advisor and lawyer to review the purchase agreement and boil it all down to the handful of issues you really care about and want to fight for. Also – make sure you understand working capital.”
What M&A trends (and/or road bumps) do you see coming in the media marketplace?
JOHN: “As we have all heard before – diversify, diversify, diversify. Publishers are swimming upstream with respect to print multiples. If you are not planning an exit for several years, invest in a unified audience database that captures all behavior – from which website pages visited to which booths visited at events.”
Editor’s note: John is co-leading the M&A Advisor Roundtable, along with Andy Clurman from Active Interest Media, at the Niche B2B CEO Summit in Denver, June 19 & 20.
More about John: John joined M&A Advisory firm W.B. Grimes in 2011 to run the Global Media & Events Group, and acquired that group and the Newspapers Group of W.B. Grimes in Jan 2018, creating Grimes, McGovern & Associates. The Global Media & Events group had excellent growth under John’s tenure, branching out into new regions and more diverse businesses. Under John, the Global Media Events & Information Services client list grew to include many more sell-side and buy-side retainer clients than the firm had ever had in its history. As the new owner of Grimes, McGovern & Associates, John looks forward to continuing the tradition the Grimes family started of helping small to medium sized business owners grow their businesses, and exit at the right time at the best price. John is an avid tennis player, foodie and movie buff (especially spy movies).
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