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Business Advice Needed before purchasing a Magazine

BusinessHatBusinessHat Posts: 1subscriber Member
edited January 11 in Selecting a Business
My business partner and I are currently considering buying a print magazine. Its a regional free circulation that has been around for about a decade catering to two different locations - the owner is retiring and the books currently has some good advertisers that will be crossing over to me after purchase.
Are there any Publishers or publishing experts with tips to share? Basically, what should I know before signing on the dotted lines. All expert advice welcome....

Comments

  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 923administrator Site Admin
    edited January 12
    Hello, @BusinessHat

    You mention it's free circulation, so is the only revenue model through advertising? 

    I would just make sure to know all avenues of revenue, publication process, team members, operating costs, etc. before making the decision, but sounds like a solid opportunity. 

    I would also start strategizing ways of bringing more money into the company, while keeping the magazine free -- perhaps premium subscription options that give extra benefits to those subscribers. 

    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
  • PZagottiPZagotti Houston, TXPosts: 22subscriber Bronze Level Member

    Hi BusinesHat,

    As a CPA I have done more then my share of small and midsize M&As over the years.  What I have found is that money, while important, is not as important to the acquisitions success as company culture is.  I have seen too many acquisitions that made since financials and strategically but was not as successful as they could have been because of business culture differences.  Make sure you understand the business from a people perspective and how they will mesh with your desired and priorities.

    Second, after an acquisition of a small to midsize company 20 to 50% of the company’s clients tend to migrate.  This is especially true with smaller businesses where the owner’s personal relationships is influential in securing and retaining clients.  I personally like seeing a portion of the purchase price of a company placed into escrow and earned as revenue materialized over a year or 2 after purchase. 

    Get a good CPA to look at the books and also take a look at the company’s tax liabilities.  You may also want to talk with the CPA about tax implications of deal structure.

    Also get an attorney to draft or review their purchase document and guide you on legal implications of the purchase.

    Ryan is correct when he says that you need to have a thorough understanding of the business and a business plan in place before the purchase to establish what you are going to do to grow or somehow add value to the company.

    Phillip Zagotti
    Partner
    Zagotti & Burdette CPA, LLC
    ZnBcpa.com
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