Bishop is currently on the EMBA program at Cranfield School of Management. A former journalist, he rose to director level at IPC, one of the UK’s top magazine publishers, and set up his own advisory firm in 2002. Since then he has made close to 70 deals and acted as a non-executive for growing businesses.
“It’s always good to always good to sell a company when it’s on an upward profit and revenue trend,” he says. This may sound obvious but a lot of owners think it’s better to wait for the top of the market, or think there’s more growth in the business when there isn’t.
“Make sure you own all your own intellectual property,” he adds. Most importantly, “Some time before you sell the business think about who you want to sell it to and how they would want that business to look for it to appeal to them.”
Consider modifying your company so that it appeals to a potential buyer, says Bishop, the same way you might change a product to make it more appealing to a customer.
The post-acquisition “earn-out” period, when business owners are working within the firm that has bought them to meet targets, is more likely to happen if there’s goodwill and the integration of the two firms goes well.
How do you make a judgment about whether there is growth in your business? Look at financial ratios and the numbers behind them, advises Bishop. As a media firm, if your user (or reader, or member) numbers are growing and revenue per user is also rising then there’s still growth left. But if one has reached a plateau or is starting to slide, sell your firm quickly! You could access greater revenue growth or cost savings if you’re owned by a bigger concern.
The successful businesses are the ones that “acquire users cheaply and sell them expensively,” to advertisers and service providers.
Bishop’s background is unusual for someone in corporate finance. He read English literature with Media Studies at Sussex University, graduating in 1991. While at university, he won a writing competition run by a car magazine. The prize was work experience at the magazine, which quickly turned into a full-time job.
He soon found he was more interested in the business side of publishing and reached director level in the largest division of consumer magazine giant IPC media. When the company was sold to AOL Time Warner, he left to set up Mark Bishop Associates in 2002, a “boutique consultancy and corporate finance business specializing in the media sector”. He acts on behalf of both buyers and sellers.
He works with three types of firms: owner-managed small firms seeking to sell up to corporates or get advice on growth strategies; mature businesses, often corporates who want advice on acquisition targets; and financial buyers such as private equity firms, also looking for advice on acquisitions. The firms are usually print or online publishers or events firms: “Any firm that is building a community around content.”
Bishop embarked on the EMBA at Cranfield because, after nine years working for himself, he realized he was missing out on the exposure to new ideas and best practice that he got when working in a big firm. “I wanted to update my thinking and gain new skills,” he says.
“An MBA is almost a requirement for management jobs now, globally. A couple of clients recently have asked me if I have an MBA.” He will complete the MBA at the end of 2012, so it will be an intense two years, especially as he is also working on a yet-to-be disclosed book too.
Bishop makes one last observation about the online media business, which so many entrepreneurs start off in these days. “There’s been growth in the number of users but a decline in yield in online advertising.” This has led firms to other forms of monetization, such as affiliate services or ecommerce.
“The best strategy is to move yourself up the value chain,” he says. And if you’re not sure how to do that, he can probably give you some advice, too.
Watch the video for Bishop's three tips for businesses that want to find a buyer.
{{video:embed url="http://vimeo.com/25829906"}}
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