When, Why, and How to Acquire Another Publishing Company
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Why consider acquiring another publishing company when you already own one? The main reason is faster growth. Another reason is reversing red ink back to black.
Four or five years ago at Chicago Review Press, we decided to grow our list, internally, from about 20 books a year to 50. This meant hiring a second acquisitions editor, a production manager, and some editorial help. Of course, it took almost 18 months for the first titles acquired by the new acquisitions editor to be shipped, another 12 months for these titles to pay back the costs of producing them, and then another year of so for these sales to fully absorb the new higher overhead. That added up to three years of red ink.
In contrast, the purchase of an existing publishing company can quickly give you more titles to sell and, if the acquisition is well conceived, can soon give you the cash flow you need to carry the cost of the money you borrowed to make the acquisition. Also, if you buy a company that has a reasonable amount of work in progress–new titles in the pipeline–you can ramp up your staff on a gradual, as-needed basis.
Two basic kinds of acquisitions are plain vanilla and strategic.
The Plain Vanilla Option
With plain vanilla, the aim is simply more sales and more cash flow. The analysis needed is not intellectually daunting–just a spreadsheet that projects five years or so of sales (based on past performance) of the acquired titles t…IBPA Members – Click here to view the full article (login required).
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