How to sell your publishing business: What to do now to attract future buyers
This Q&A was originally featured in The Publishers’ Playbook newsletter. It’s free and you can subscribe here.
“We’re a start-up publisher that is generating reasonable revenue but ultimately we’d like to sell the business. What should we do now to prepare for sale in three years’ time?”
This is a question we hear regularly from publishers. And for some, it’s the ultimate mark of success. You’ve shed blood, sweat and tears building a media business – and now somebody wants to buy it!
But how do you get to this enviable position? And what can you do now to make you more attractive to buyers when you’re eventually ready to sell?
Here are the 6 most important things to consider when preparing to sell your publishing business:
1. Stability is more important than scale
Surprisingly perhaps, it’s not always necessary to scale your publishing business before you sell. It’s perfectly possible to sell a niche media business with 1,000 loyal, paying subscribers. When you go through the acquisition process, potential buyers are most interested in your risk profile. They want to see that you have a stable, reliable income stream.
It’s also important not to become overly dependent on one individual – probably you! You may have one million readers, but if the stability of the business is entirely reliant on your presence, that’s not attractive from a buyer’s perspective. If you disappear, so does the business. That said, scaling isn’t something to avoid. Just be sure you’re not scaling for scaling’s sake.
2. Manage risk by diversifying your revenue streams.
Given the events of recent years, I don’t think it’s ever possible to completely futureproof the appeal of your publishing business. Today’s safe revenue model could easily be tomorrow’s risky revenue model. But the most powerful thing you can do right now is to focus on revenue diversification. Hinging your business on a single source of revenue puts you in an extremely vulnerable position.
Subscription revenue is considered relatively low risk as it’s recurring and less likely to be impacted by external forces. But live events were once thought of as low risk, then Covid hit, so it’s crucial to diversify. Not because you want to sell, but because you want to survive.
3. Know your numbers (and hit them every time).
Selling a publishing business is a long-term process, which typically starts with a few inquiries and then hopefully progresses into due diligence. Nothing spooks buyers more than missed targets so it’s vital that you hit every number, every time during this period. And hire the best accountant you can find. It could save you thousands. Your accountant is just as important as your lawyer in preparing your business for sale.
4. Consultants are everywhere. True experts are a rare find.
One of the biggest challenges of running a digital publishing business is choosing the right people to support you on your journey. I coach publishers who have spent thousands on consultants and supposed ‘experts’ that ultimately never delivered a positive ROI. The biggest piece of advice I can offer is to get to know the person before engaging them. Tell them about your business and get a feel for whether or not they truly understand what you’re trying to achieve. The publishing industry is a unique beast. Be sure that anyone you work with has publishing expertise and understands not just how the industry looks like now, but how it will operate in the future.
And be very, very clear about your expectations and the intended outcomes of the work. Only enlist a consultant’s help when you have 100% confidence they can deliver what you need. That’s why we always insist that new clients have a free 30-minute consultation with us first. It’s the only way to ensure both parties are aligned and that the relationship contributes to the bottom line.
5. Entrepreneurial publishers rely on entrepreneurial teams
Not everyone is suited to a small publishing environment, so recruit wisely. As a small publisher you need a team that is prepared to run through walls for you. People who view the business as their own, people that are prepared to roll up their sleeves and do what needs to be done. This doesn’t come from the most impressive resume. It’s an attitude and often the by-product of building an entrepreneurial, can-do culture. When it comes to selling your business, the chemistry of an empowered, committed team is incredibly appealing to potential buyers.
6. The 3 things that always matter to potential buyers
- Revenue will always be a key metric of a publisher’s performance. However, strong revenue doesn’t always equate to a sustainable business. What really matters is that you have a solid business plan and can demonstrate profit and future growth. There’s no point in turning over huge sums if your costs are similar to your revenue.
- Profit aside, it always helps to be the market leader in your specific publishing niche. So it’s a really good idea to have a bit of a PR strategy in terms of your profile. When preparing to sell, make a point of being quoted in the press or on TV. Because any potential buyer that’s interested in purchasing a niche media business will always want to purchase the title that everyone’s heard about.
- And you’ve got to have great people. I’ve met investors who buy into publishing businesses based purely on the people in the room – because they are the ones that give them confidence the business can succeed. So passion can’t ever be underestimated.
If you have a question you’d like answered in a future article please email [email protected] For a more personal response, you can book a free 30-min consultation with myself or another of the Publisha team.