Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Governments need to address business price quoting just as they are addressing housing under quoting

Mark Fletcher
January 27th, 2017 · 2 Comments

Under quoting by real estate agents is an issue that gets plenty of medial and politician attention, especially in Victoria and New South wales where auctions appear to be more popular. In Victoria recently  one agent was fined and more are heading to court.

In our channel, the problem is the misrepresentation of the performance of the business. This is done several ways:

  1. The misstatement of the profit of the business by providing a blended P&L and not the P&L the business actually operates under.
  2. The valuation of stock as if it is all current when, too often, plenty of the stock sold with the business is not current.
  3. The value of business assets such as the computer system where they have no value because they have not been maintained or because the data is useless. Useless data = no business value.
  4. The misstatement of revenue because of manipulation to minimise tax.
  5. The misstatement of actual business costs because of poor records for owner time required in the business.

Some brokers are dreadful at preparing a business for sale and providing prospective purchasers with accurate and reliable data on which to make their decision. this can see people coming into the business unprepared and based on data that is completely wrong.

I have had two calls this week from people looking to buy newsagencies in Victoria and in each case the broker has not done their job in preparing the business. For example, they have a value for the computer system, considering it and the data an assist. In each case, the data in the computer system is useless, there is no stock on hand value, no tracking of each item sold and no compliance with industry data standards. A quick check by the lazy broker could have discovered this and counselled the newsagent to sort the data out to make the business more appealing.

People looking at buying a newsagency need to be fierce. They need to ask the tough questions, demand proof and only proceed when they are completely satisfied.

People selling their newsagency need to prepare the business, make it appealing,e sure all data is accurate and clean house so the sale is easy … otherwise, people like me, when asked for an opinion, say don’t do it, not this time.

10 likes

Category: buying a newsagency · Ethics · Selling your newsagency

2 responses so far ↓

  • 1 Anne Jones // Jan 8, 2018 at 5:23 PM

    What is the current trend for multiples for buying a news agency?

    0 likes

  • 2 Mark Fletcher // Jan 8, 2018 at 7:10 PM

    Anne this can vary by type of business and location. It can range between 1.5 to 3 times net profit as shown in the P&L.

    0 likes

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