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.
These words which I published last week in a post here have upset some newsagents. I can understand that. I am challenging the traditional way newsagencies are valued. I am proposing that instead of a high multiple on an often questionable net profit figure that we let the market find its level. This approach makes incoming newsagents more informed and surely that makes for a healthier channel in the future.
Newsagents need to debate these matters since they go to the viability of our channel in the future. It’s this long term view we need to take. At least I hope that’s the view newsagents take on this issue.
I’m glad to discuss the issue of newsagency valuations with anyone. I’d be glad to participate in open debate - not because I think I am right but because I think we ought to debate these things so we can work out what is right.
I want a viable newsagency channel long into the future. Hopefully the stone I budged down the hill last week will, in a small way, support that.
1 response so far ↓
1 Lorraine // Feb 27, 2008 at 10:53 AM
How many newsagents, having purchased a business, find themselves questioning the information on which they based their purchase decision.
I suspect any negative comments received are because those people, having been subjected to paying too much based on suspect multiples and add backs, are wanting to do the same to the next buyer.
Leave a Comment