Selling a magazine title

Appealing magazine titles do not come onto the market for genuine reasons that often. But this is what prospective buyers are looking for - a strong title that is profitable, has forecastable future cash flows and is being sold for believable and authentic reasons.

Smaller, privately-owned publishers tend to hang on to their magazine titles at all costs. They often refuse to sell a title until they are forced to as a result of retirement, ill health, family pressures etc. This is exactly what buyers want to hear and most will pay top dollar for a title that is doing well and is being sold grudgingly.


Before selling a magazine title ask yourself these questions:

Is your title as profitable as it could be - or can you demonstrate that it can realistically become more profitable?

What does your business offer? (Think about why someone would want to buy the title and where it sits in the marketplace.)

What potential is there for growth (in circulation/market share/sales/profits)?

Why are you selling the title?


Grooming your magazine business for sale

Grooming a business before selling it is essential for any organisation - it is amazing how many publishers overlook the importance of this when selling off titles.

Any negative elements of the business should be addressed at this stage. Negative issues can include staffing problems, financial matters, unsettled litigation or out-of-date accounts. Make sure these things are cleared up and do not have to be discussed with buyers. Clearing these problems will enable sellers to achieve much higher prices with minimal effort.

Before putting the business up for sale it is often a good idea to involve managers. Sellers often find that trying to keep sales from managers and editors will only backfire as staff realise why they have been asked for information relevant to a sale - and this is difficult to avoid.

The online element is a major factor these days, as many publishers can no longer rely on paper sales alone to make their money from a magazine. Buyers want to understand the online relevance of a title and to appreciate the potential for expanding this in the future. Quite clearly it is essential that an online strategy be in place when selling a magazine title - even if this strategy has not yet been played out to its full potential.


When is the right time to sell?

The timing of your magazine sale is of the utmost important in this buyers' market. Gone are the boom days of the year 2000 when venture capitalists were ploughing their money into all kinds of ventures.

These days, investors have less inclination to take risks. Delaying a sale until you can show you are making the profits that are currently merely in your forecast could result in a much better chance of selling and for a better price to boot - the mantra here is 'sell when you can, not when you want.'

When you have decided the time is right to sell, it is useful to create a clear and realistic selling price to aim for - or at least a range that will be acceptable. Look at current trends in multiples being achieved to do this, bearing in mind that factors such as high subscription renewal rates will make a magazine more valuable than those with controlled circulation, and reliance on advertising revenue alone.


Understand your buyers

Understanding where your buyers are coming from is helpful when marketing your magazine title for sale. When dealing with an industry buyer, they will be less interested in the figures and will instead want to know about the possibility of forming synergies and other operational advantages. Financial buyers will want to scrutinise the finances and will be looking for signs of profits and potential for growth and expansion.

It is worth trying to steer clear of players who may be meeting with you in order to gain information that they can use to improve their own business operations. As always, ensure that you get the best possible advisers to help you in the process. Not only does this mean a higher likelihood of a sale as they will be able to contact prospective buyers but a professional adviser can give an objective view of the business. What is more, having someone to negotiate on your behalf and flush out time wasters is invaluable and allows you to stay focused.

Take specialist tax advice very early in the process. The sale of a magazine title or newsletter is classed as a business asset and is usually taxed as the higher rate than if you sold shares.

Finally, never go on holiday while in the process of selling your business. Felix Dennis, the renowned millionaire publisher, writes that when a deal is going down, the principal should be on hand at all times to guide the sale and its advisers; failure to do so can be costly.


EXAMPLE OF A PROFITABLE NICHE MAGAZINE OPERATOR

Although magazine publishing in general is having a tough time right now, London-based Ink Publishing is enjoying record revenues and consistent profits as the world's leading producer of in-flight magazines.

Their £27 million turnover and £2 million plus profits are perhaps also surprising in the view of the reduction in air traffic over the past two years. But the company has grown to dominate its niche through a core focus and the fostering of an attractive business culture.

Airline magazines are unusual in that they have little distribution or marketing costs, and can sustain a high readership of high-spending consumers with little effort. Something like 80% of passengers read the in-flight magazines. Airlines usually receive a fee tied to the flight passenger numbers, and the magazine publishers receive all their revenue from selling advertisements.

Ink achieves a high level of efficiency by running several publications per office (it has five), and its sales staff speak thirteen languages to sell advertising in each of 120 countries.

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