Newsagency businesses are selling through the covid challenges. While retail businesses in some other channels are not selling, newsagency businesses are selling and some have sold quickly, in a week or two of going on the market.
This is good for the channel. The number of buyers looking speaks to how the channel is viewed as an investment opportunity.
I have heard of a couple of instances where the purchasers were able to obtain bank finance, too, which is a nice shift from recent times.
Being essential through the pandemic is helping to reset how the channel is viewed.
Any idea what ebitda multiple they are selling at? What’s the best way to market your business for sale?
Jim, the multiple varies. Regional and rural high street attract the best result.
The best way to market the business is to, first up, drive a healthy and attractive P&L result. That starts a year out at least.
For the marketing itself, it does depend on location,. I have seen businesses sell through a social media post, others through local real estate agent and others through a specialty broker.
Keys include: that the business looks like a good investment, feels like it has upside and can be understood.
Total Transperancy with all source documents available and presented so that the real Nett Profit is understood.
There is no standard or average EBITDA though there are three different methodologies used depending on the lease term and conditions and in particular how much money is needed to reinvest (capex) to stop the circulation and stationery slide that many are suffering from as the business can only be valued on sustainable income.
Is an ebitda multiple of 2.5x achievable if you tick all these boxes (low print/staty contribution to GP and floor space, high gift, card and lotto contribution to GP, over 2yrs on lease, solid financial reports and tax returns, stable gross sales)?
Without looking at the total amounts one could not tell also there is a different ratio for the figure B.O.S. and depending what the Drawings are. It would be unwise and misinformation to state. You could put it on the market or check those on the market for a guide.
For me Jim 2.5 is probably the starting point. Importantly the EBITDA calculations need to be adjusted for working owners remuneration. Unfortunately many are only covering enough to pay fair wages to the owner.
Personally I prefer a newsagency with less reliance on lottery sales as I find the higher the turnover the lower the bottom line return due to increased labour costs .
Spot on Steve as long as the balance has the right G.P. Margins.
Those that are not covering the Household basic income $78k p.a. or are only earning such bottom line can be sold at reduced p.e. for those that want perminent residency and can’t get a sponsor. They are buying a job then they sell the businesss to a relative. Same as the Greeks and Italians in the fifties with the Greengrocer and the Deli. etc.
lease terms are important especially if one borrows.