What’s your exit strategy?

Feb 1, 2025

There are several steps publishers can take to potentially increase the value of their publication in a sale

LEWIS FLOYD
President | Business Valuation Consulting LLC

The expectations of many publishers are based on a multiple of the publication’s annual revenues. Unless the publication has extraordinary cash flow, that multiple to revenue paid will be between 50% and 60%. In today’s market, buyers are typically paying 2X-2.5X adjusted cash flow (available cash flow after all expenses including owner compensation, with add backs for any interest, amortization, depreciation, expenses that would not accrue to a buyer, and owner perks).

There are several steps publishers can take to potentially increase the value of their publication in a sale. Putting these into action over a 2–3-year period should set the stage for a smooth and rewarding transaction.

  1. Specify goals and objectives. Clearly set your expectations and how to achieve them.
  2. Determine the right time to sell. Make your sale proactive, not reactive.
  3. Have all records up to date and accurate before you go to market.
  4. If a key member of your staff has left, replace them. Don’t retire before you sell, run your business as if it were “Not for Sale”.
  5. Implement those cost-cutting moves now. The more profit the higher your sale price.
  6. Be competitive. Use technology to help advertisers get the most for their ad investment.
  7. Merchandise within your pages. Add content that will draw readers to advertiser products and services.
  8. Develop a digital strategy. Bring in outside talent to create and implement a strategy that vaults you into the digital age. Money well spent.
  9. Get your receivables and payables in order, and clean up any legal issues, old accounts.
  10. Understand the market value of your publication. Take all your emotion out of the valuation by having an objective third party assess the re-sale value of your publication, (i.e., an experienced newspaper brokerage company).
  11. Good tax planning is also essential to successful sale. Consult with your accountant, financial planner and attorney to explore the optimum way to potentially structure your transaction.
  12. Use a Broker! Selling a publication requires an ever-increasing level of sophistication and a great deal of your time. Few publishers have either. Let a broker handle the prospects.