It's M&A time! I'm considering buying an ad-based email newsletter from one publisher, and a friend of mine is considering buying a print subscription newsletter from another publisher.
Both of us have been trying to determine fair valuations this week. In general (and this is so broad a statement as to be taken with a giant grain of salt), an actively published newsletter in this economy is worth about 1.5x annual revenues.
Factors that can lower this value:
Factors that can increase the value:
- If buyers are intensely loyal fans. High renewals, high open and click rates, high ancillary product sales - If the product is highly profitable (more than 20% EBITDA profits per year) and does not require significant additional investment - If editorial is easy to hire for so if you lose your writer he/she is replaceable with a minimum of effort (harder than you think) - If the product has a site with high traffic for its niche - If the product has pre-existing marketing partnerships such as co-registration deals and strong selling affiliates - If you're in a highly competitive-niche and this acquisition could make a real difference to helping you be #1 - If you have complimentary publications already and this would fit nicely as a sibling and allow for cross-sells.
One last tidbit: If you are buying to merge a competitor's publication in with your own file, you may base part of the price on a per-name basis. In that case you'll want to know how much overlap there is between the two files before you make a firm financial offer.
If you happen to be a member of the Newsletter & Electronic Publishers Assn (NEPA: www.newsletters.org) they will compare the two files for you at no charge in a secure place where nobody who shouldn't can see the names on either side.
(Note: Aside from being a member, I have no connection with NEPA.)
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