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It is vitally important to start any business off on the right foot. This means positioning.
In terms of enterprise valuations, a huge issue for any new business within the publishing space will be that it is deemed an editorial-driven company.
It is widely acknowledged by investors that editorial-based businesses are marginal and barely break-even, if at all. The cost of producing the product is simply too high and not scalable enough. This single issue results in 1-4x margin-based valuations rather than a valuation that is 4-8x revenue.
To help alleviate this, the fictional business will develop a proprietary job board. This will potentially change the narrative from low margin publishing to scalable ‘classifieds’ platform. Classifieds-based businesses achieve a valuation from a potential 6-12x revenue multiple. This is even higher in specialised markets.
Also, to help alleviate the ‘publishing’ categorisation issue one plausible strategy could be to secondarily pivot to a SaaS model.
You could achieve a valuation of 4-8x SDE, which in this case would equate to a similar number to 4-8x EBITDA. Not at the level of a classifieds business, but still higher than traditional publishers.
Additionally, it will be worth looking at small, niche acquisitions in the $20-80k range, preferably website that are barely (if at all) monetised. These would add quite a lot of usage to the business; and open up potential new angles.
Synergy on low-cost acquisitions include:
- Relevant industry, or interest area
- Relevant demographic, or country
- Relevant content
- Relevant functionality
