Tips on Weathering the Storm by Maximizing Your Company's Value

Don't let the current economic situation get you down. Stephen Kerr, an M&A advisor to media companies, says it's time to get your ducks in a row to help build the value of your publishing company.It goes without saying that times are tough right now for the industry. As the current economic situation grows more grave, publishers are looking for fiscal insights on how to keep their heads above water. With several decades of M&A negotiations and business valuations under his belt, Stephen J. Kerr, president of Business Marketing Consultants, knows how to help. He says that companies who best understand their value, are best prepared for the uncertain times ahead. He spoke with Publishing Executive Inbox about how you can weather the storm, while still creating long-term value for your company.Get your accounting straight. "The advice I give a client that's thinking of a sale is the one thing that will prevent any good transaction from happening -- having screwed up finances," Kerr says. "It's a disease of publishers who tend to be journalists and English majors at heart. They neglect the financial planning side. People come to me with a train wreck and expect me to get the train on the tracks when they could have done it all along. Nothing good is going to happen."Don't cut back on marketing. "The first thing -- the knee-jerk reaction -- is to cut marketing, because they don't value marketing in publishing," he says. "It's another problem inherent with the publishing trade. They think it's editorial content that's the key, and it's almost never the truth. The biggest mistake is stopping going to trade shows. They cut back on e-mail blasts. They say we can't do this. Do more marketing. While everyone else is pulling back, pick up market share. This is a perfect time to do that."The No. 1 thing you can do is get your technology up to at least industry standard. "The problem I'm having with companies that are desperate to sell is that they completely missed the boat on the technology side," Kerr says. "Their idea of technology is having a Web site. They're an ink and paper company -- the same one they've been for the last 25 years. They've done lip service to digitally setting up their company by having online newsletters and having viral marketing. It's lip service. They don't really do it. For a company that wants to be acquired, the highest prices go to the leaders, not the followers."Have your publication content made searchable. "It's kind of expensive to set up XML databases and to do meta-tagging. Have all your back issues searchable," he advises. "If your back issues aren't searchable, have your new issues searchable. At least have your 2008 issues [searchable], then go back to '07, '06, '05. Create communities around your products. If you have a magazine about dolls and doll-making and someone wants an article about Raggedy Anne, can you make that article available? [Publishers are] missing all these kinds of income sources." Reach out to your advertisers and offer more."The worldwide recession is going to be with us until 2010," Kerr says. "Most publishers are just looking to hold onto their market share and weather the storm. Their advertisers are going to run for the hills. The only thing we can do is go and reach out to those advertisers [and say to them], 'You've been advertising with us for 20 years. What can we do to help you?' I talked to publishers that say, 'Wow. I can do that.' … You have to ask how can we work together and be a marketing arm of your company. Your customers have problems right now. A magazine is in the position to offer solutions." The money is out there if you want to sell."[Publishers are] coming to me, and they're saying, '… We're having a good 2008. 2007 was great. 2009 and 2010 don't look like they will be so good. Should I sell now or hold on? Are there any buyers out there for a company for me?' I've been doing this for 20 years. The amount of money goes up and down very little -- plus or minus 10 percent," Kerr suggests. "Pre-Internet bubble -- when there was crazy money people were getting -- the biggest and best were getting outrageous prices. … [Today,] it's pretty much the same money. It's not changed in 20 years. The money doesn't really go away. The companies raising money raised it two or three years ago. There's still lots of money out there. The question is, is it right for you? If you feel you've taken [your company] as far as you can take it, sell. If you feel there's a lot more growth [potential], don't sell. If you're a 67-year-old publisher in Atlanta, and you've owned this company for 22 years and you're getting tired, and you realize with the new electronic frontier coming up, it may not be your cup of tea. You don't want to be an Internet entrepreneur, you want to be a publisher. But these guys are afraid to sell because they think there's no money out there. It's not true. The people with the money are saying, 'We're here.' There's hundreds and hundreds and hundreds of these private-equity guys." Gather your friends around you to help weather the storm. "Go see your accountant," he says. "Go see your attorney. What happens is people get in a bunker mentality, and when you go into the bunker, nothing good happens. Reach out and start talking to your customers and advertisers, and get your team set. Instead of pulling in, reach out. That's how people survive crises."

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Tips on Weathering the Storm by Maximizing Your Company's Value

Peter Beisser

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Peter Beisser