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High-End Publishing & Marketing Company

CASH FLOW
$80,807

Specifications

  • Price
    $250,000

  • Cash Flow
    $80,807

  • Revenue
    $354,180

  • Location
    Des Moines

  • Reason for Sale
    Retirement

  • Valuation
    $250,501

  • Profit Margin
    22.8%

  • Employees
    1 FT Graphic Designer

  • Lease
    $1,000

Located in Des Moines, this marketing and publishing company has been in business since 1994. The company maintains a great reputation in the industry and the community for delivering quality publications and professional service.

A high-end, bi-monthly print magazine was established in 2001 with local content catering to an upscale demographic. Distributed across the Des Moines area, it has an estimated 40,000+ readership. For four years, a digital-only, industry magazine has been produced and emailed to nearly 4,000 industry contacts. Both publications have dedicated websites and archived digital publications.

Writing, photography and copy editing for both publications are provided by long term freelancers, and all archived material rights are retained by the owner. All layout and design is handled by a full-time in-house graphic designer, with the owner handling all ad sales and providing editorial oversight.

The digital publication is funded solely by advertising, with the print publication by advertising and subscriptions. A new owner could hire freelance sales personnel or handle more of the editorial creation, marketing services and the business management, creating whatever position they wanted. Both publications are in a unique position to grow in content and scope, while also expanding geographically.

Business Highlights

  • Year Established: 1994
  • Location and Service Area: Des Moines metro
  • Distribution: Print magazine has about 12,000 copies with a readership of 40,000+ and has digital editions. Digital-only publication is emailed to nearly 4,000 local industry professionals.
  • Services: Digital and print publications also offering marketing and advertising
  • Lease: 1,000 sq. ft. leased for $1,000/month NNN
  • Reason for Selling: Retirement
  • Employees: 1 FT Graphic Designer; freelance help for writing, photography and copy editing
  • Seller Training Period: 90 days
  • Growth Opportunities: Hire commission-based sales personnel; expand scope/demographic areas
  • Current Owner’s Responsibilities: Seller generates ad sales, and oversees editorial content and marketing

Financial Highlights

  • List Price: $250,000
  • 2016 Gross Sales: $354,180
  • 2015 Gross Sales: $342,099
  • 2016 Cash Flow: $80,807
  • 22.8% Profit Margin in 2016
  • YOY Growth: Seller has cut back the number of issues printed, and sales still rose by 3.5% in 2016
  • $10,700 of Assets included in the purchase price:                                       
    • Equipment: $10,700 in new laptops, furniture, software and hardware
    • Intangible Assets: Publisher retains all rights to articles, photos and other archived material; name recognition, loyal readership, repeat advertisers, and the only publication of its kind in the area

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnNotes
201620152014
GROSS SALES$354,180$342,099$348,354
Net Income Shown on Financial Statement$59,399$42,057$7,786
ADDBACKS
Depreciation$10,523$11,460$0Non-cash item
Meals & Entertainment$1,131$1,057$1,178Personal expenses unrelated to business
Interest$2,466$2,762$1,702Non-onward going expense
Personal Auto Expense$0$3,976$0Owner's personal auto expenses
DirecTV$988$988$988Non-onward going expense
Personal Cell Phone$600$600$600Owner's personal cell phone payments
Discretionary Costs$5,700$5,700$5,700Non-onward going expenses
TOTAL ADDBACKS$21,408$26,543$10,168
Seller's Cash Flow = Total Addbacks + Net Income$80,807$68,600$17,954
Profit Margin22.82 %20.05 %5.15 %
  • 22.8% profit margin in 2016
  • 3.5% increase in sales during 2016, despite a cut in the number of printed editions

Distribution

Bi-monthly print publication distributes about 12,000 copies, reaching an estimated 40,000+ readers in Polk, Dallas, Marion, Madison and Warren counties. Plus, the publication is digitally-produced and archived on the website with direct links to advertiser’s sites.

  • 5,000 copies are direct mailed to a pre-qualified list of homes
    • Income over $100,000
    • Home valued over $300,000
  • 1,000 copies are direct mailed to subscribers
  • 6,000 complimentary copies distributed to 350+ businesses

Monthly digital-only business-to-business publication is emailed to nearly 4,000 industry leaders and is archived on the website with links to advertiser’s websites.

Services

Custom publishing

  • Corporate brochures
  • Specialty catalogs
  • Promotional pieces and posters
  • And more!

Website design and development:

  • Hosting
  • Design
  • Development
  • Maintenance

Marketing services and advertising agency:

  • Advertising agency buys
  • Graphic design and social media
  • Flyers, brochures, etc.
  • E-newsletters
  • Social media

Income Analysis

  • 83% of sales are generated through advertising and subscriptions
  • Custom publishing comprises 7% of income, and marketing comprises 5.7%
    • Both could continue to become a more lucrative growth area

Employee Information

  • 1 FT Graphic Designer
    • Salaried
    • Handles layout and design for publications
    • Creates and designs marketing materials for clients
      • Flyers, brochures, specialty catalogs, promotional pieces, etc.
    • Maintains company website, as well as roughly 20 client websites
      • Hosting, design and implementation

Writing and photography are provided by long-term freelance talent, and each is paid by a negotiated price.

Please note that all archived material (articles, photos, etc.) are owned by the publisher.

Seller is the sole sales generator, but buyer could hire commission-based sales people to grow sales

  • A buyer strong in sales could also handle all sales or, skillset permitting, could become more actively involved in managing the business or in content creation

Growth Opportunities

  • Increase digital distribution, content and sales opportunities of online-only publication
    • Easier and cheaper to produce, with a faster publication to reader timeline
    • Wider audiences can be reached through e-newsletters and e-zines than through the mail 
  • While the majority of readership of the printed magazine is women, the content/scope and advertising could be further geared toward women to gain a wider audience than is currently served
  • The print publication could expand their brand and format to other territories and communities. Using some common editorial and layout mixed with local content and selling advertising in that community
  • Increase marketing services, advertising services and custom publishing by generating more clients and related activities

Valuation Details

The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.  The formula used is as follows:

Cash Flow       x          Multiplier          =          Price

Cash Flow is the sum of net income plus any owner perks and non-onward going expenses.

Multiplier is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation. The average multiplier is 3.

The Cash Flow for 2016 is $80,807, and the prescribed multiplier is 3.1.

With this information, the computation result as follows:

$80,807           x          3.1       =          $250,501

The List Price for the business is set at $250,000.

 

Funding Example

  • Buyer down payment of 10% ($25,000)
  • Seller carry of 10% ($25,000) at a rate of 4.5% over 5 years
  • Bank loan of 80% ($200,000) at a rate of 5.25% over 7 years
  • After loan payments, a buyer with a down payment of $25,000 would receive a return on investment of 164% in the first year, and a Cash Flow of $41,010.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.

Purchase Price:

$250,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2016 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2016 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
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