Business Valuation of a small publishing company

Situation

Our clients are the directors of a group of companies. One of their businesses is a relatively new publishing business with around 2 years worth of trading behind them.

We were requested to help them establish a value for the business so that they could then sell it.

Task

• To establish a valuation for the existing business
• To show the directors what actions that could be taken to increase the value of the business

Action Taken

• We worked on this project with Mike Williams, one of our Associates
• We modelled the current performance of the business
• We helped the directors to better understand the level of risk and return that the business was subject to
• We established the value of the business using P/E multiples and Discounted Cash Flow techniques
• We helped the directors to understand what the possible future customer market potential for the product produced by the business might be
• We helped the directors to consider which actions they could take that would seriously increase the value of their business
• With that knowledge, the directors then had sufficient information to consider a range of strategic options for what to do next

Outcome

• We established a valuation for the business as it is today. Lets say an amount A$ X.
• We showed the directors a roadmap of the range of actions that they could take that would increase the value of the business to A$ 2X or even up to A$ 5X.
• Based on the service we provided, the directors decided to not sell the business, but rather to invest in it and make appropriate changes that would allow them to benefit greatly from that investment.

"Thanks Steve. When we first started this project we were intent on selling the business, but were not sure how much it was worth.

Now that we have a better view of the strategic options available to us and a better understanding of what we now need to do to create that extra value, we have decided to not sell the business but rather to invest in it and change how we run the business to create and harvest the extra value that is clearly there.

I am very happy with the service you have provided and would be pleased to recommend you to others who need some good, solid business advice."

William R, Managing Director

“Thank you for your encouragement and support to William and myself for our 3008docklands magazine. Through your training, we were able to build confidence in ourselves to make the necessary steps and add more value to our magazine, and ultimately, our readers. As you pointed out, having the right team around you is essential in any small business. We have now taken those steps and are on the right track to have a very successful 3008docklands magazine. We are truly grateful for the building blocks you have provided to us, and look forward to many successful years of publication to come. With warm regards”

Susan Riley, Director