Selling Forest Hill

I have made a decision to put our newsagency at Forest Hill, newsXpress Forest Hill, on the market.  I have owned this business for twelve years and feel that it is time to pass this business to others to take it on the next part of its journey.  It’s in healthy shape.

 

I purchased Forest Hill in February 1996 to provide hands on experience for myself and our team at Tower Systems.  It has played an important role in helping us build better software for newsagents and has acted as a place where we and newsagent suppliers can test new standards and products.  Forest Hill and the experience it has provided is a key reason Tower Systems is by far the largest supplier of software to newsagents.

 

Purchasing Quayside Newsagency in Frankston late last year maintains our excellent hands-on connection with operating a newsagency.  Indeed, as we embark on a major shop-fit and a realignment of product mix, we have a new playground in which to explore the newsagency of the future.  I am also a significant shareholder in newsXpress Watergardens which offers a different hands-on experience in pursuit of a bright future for newsagents.

 

I think it is time for change in how newsagencies are valued.  The multiple of between 3 and 4.5 times net earnings where net earnings is a figure with too many add-backs is not viable for incoming newsagents.  It is more important for us to make our money week by week rather than relying on a parachute at the end.  Ill informed purchasers find they have paid too much. 

 

I appreciate that this sounds like heresy to some looking to exit soon.  I have looked at how other businesses are valued and I think that for the health of our channel we need to debate this issue today.  Hence my comments here, to encourage a conversation about how we value our businesses when we sell them.  We owe it to the future health of the channel to talk about this issue.

 

In line with my thinking, I have not put a price on Forest Hill.  We are inviting offers.  Interested parties who complete a non disclosure will be provided all the information they need to make an informed decision.  We will let the market find its level.  Of course, there may be no interest in which case we will implement t plan B – and, yes, we do have a good plan B.

 

I have appointed Denis King as the broker to handle the sale.  I have known Denis for years and have done business with him in the past.