Three elements affect an
owner’s ability to make an advantageous sale of a publishing company:

·      Time.<span
style=’font-size:11.0pt’> How long can the seller take to prepare the company
for sale and complete the sales transaction?

·      Pressure.<span
style=’font-size:11.0pt’> What kind of pressure is the seller under to complete
a sales transaction?

·      Money.<span
style=’font-size:11.0pt’> 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 to 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 businesses 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 diversify 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.

A co-founder and publisher
of two successful trade-book publishing companies, Howard W. Fisher now
operates The Fisher Company to help growing publishers with business
development and mergers and acquisitions. He is a former PMA president and a
frequent PMA University presenter.

Daniel R. Siburg, CPA,
formerly a company president and CFO, 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.