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Articles List

Exit Planning Series

Planning to Sell vs. Needing to Sell

What Buyers Want to See

Determining Value for a Publishing Company

What Creates Value in a Publishing Company

Key Choices, Key Moves


Taking Care of Business Series

Managing Your Cash Flow

Managing Your Accounts Receivable

Asset-Based Lending

Managing Your Inventory

Risk Management


Exit Strategies

Planning to Sell vs. Needing to Sell

© 2006 Howard W. Fisher and Daniel R. Siburg, CPA, CVA

Three elements affect an owner’ advantageous sale of a publishing company:

  • Time. How long can the seller take to prepare the company for sale and complete the sales transaction?
  • Pressure. What kind of pressure is the seller under to complete a sales transaction?
  • Money. Why and how quickly does the seller need the money from the sales transaction?

Sellers who are planning to sell their companies generally have all three elements in their favor. They can take as much time as necessary to prepare the company properly for sale because they are not under pressure tos ability to make an sell it, and they probably do not need the money from the sale for their businesses.

On the other hand, all three elements work against sellers who have not anticipated a need to sell their companies. Publishers who find themselves impelled to sell do not have enough time to prepare their companies for sale and are usually under tremendous pressure because they need the proceeds to pay off business debts and stop negative cash flow.

Reasons for Planning to Sell

Owners of publishing companies often plan to sell their business to redeploy personal financial holdings. When a majority of an owner's net worth is tied up in a publishing company, the owner may want to diversity the wealth and risk concentration in the business by selling it.

The impetus may be a life event, a change in priorities that favors family, a new business or hobby outside of publishing that requires financial support, or the death of a business partner.

But no matter what the reasons are for planning to sell, when a publisher has the time to prepare correctly, the business will be more financially viable in the future. As a result, the publisher generally gets greater value for it.

Reasons for Needing to Sell

Owners of publishing companies who need to sell have probably not been planning to sell and can be motivated by a variety of business situations. Perhaps the publishing house is unprofitable and losing money and the owner is trying to avoid bankruptcy by selling. Perhaps the business has lost a major customer; if sales volume has declined significantly for that reason or any other, the company may have limited access to cash to support new and ongoing operating capital requirements. Other reasons for the need to sell could be personal—an owner’s major health problem or divorce, for instance.

Whatever the reasons, publishers who do not have the time to prepare correctly for the sale of their companies generally get less value for them—and considerably less value when the future financial viability of the company is questionable.

The Readiness Strategy

Whether you are carefully planning to sell your company, cheerfully sure you'll never want to sell it, or somewhere in between, you will enhance the company’s value if you make it ready for sale at all times. This is just good business sense, because it means operating the company efficiently and ensuring that all financial information is accurate.

The next article in this series will cover ways to prepare a publishing company for sale; later articles will explain how to create more worth in your company, how to value the company, and how to handle the sales process.

Howard W. Fisher
Managing Director
A co-founder and publisher of two successful trade book publishing companies, Howard now operates The Fisher Company to help growing publishers with mergers and acquisitions advisory services and strategic consulting. He is a former PMA President and a frequent PMA University presenter.

Daniel R. Siburg, CPA, CVA
Director
Dan is formerly a company President and CFO. He provides mergers and acquisitions services to clients, and presents media industry operating statistics and commentary at many publishing meetings. He is a CVA (certified valuation analyst) as well as a CPA.

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The Fisher Company
7618 N. La Cholla Blvd.
Tucson, AZ 85741
Phone: 520 547-2460
Fax: 520 744-0944
www.thefishercompany.com
The Fisher Company, LLC

 

 

The Fisher Company • 7618 N. La Cholla Boulevard • Tucson, AZ 85741 • 520.547.2460