Newsagency Values

The newsagency market is a mature mass market with stable long-term consumer demand for newsagents core product. The continuing and ever increasing life-style driven demand for news and entertainment, information, education and personal services has ensured the Goodwill of newsagencies has been, and continues to remain, high. This Goodwill is further underpinned by the publisher and Casket supply contracts, which all combine to make a newsagency a sound business investment.

Prices for newsagencies are dictated by the market, and range from approximately $100,000 to several million dollars. The Purchase Price is the total of Goodwill (which should include plant & equipment, fixtures and fittings, motor vehicle etc) plus Stock at Valuation (SAV). The Goodwill of a business is currently a multiple of the adjusted net profit to the owners, or Net Maintainable Earnings.

Net Maintainable Earnings is calculated as a return to 2 working owners, doing reasonable hours, before any form of owners remuneration, interest & borrowing costs, depreciation, taxation, amortization, personal expenses and any one off, non-recurring expense. (known as Addbacks).  This is also known as P.E.B.I.T.D.A,  (Proprietors Earnings Before Interest Taxation Depreciation & Amortisation)

Factors such as geographic location, lease term, type of shopping centre, condition of the shop-fit, degree of infrastructure and the number and type of publisher contracts held will determine the multiple of net maintainable earnings that buyers are prepared to pay as Goodwill for any particular business.

Transfer Procedure

The transfer process from price agreement to settlement normally takes 10 to 12 weeks with settlement usually taking place on a Monday. The stock-take is generally conducted after the close of business on the previous Sunday, and conducted by an independant stocktaker to determine the wholesale value ex-gst. 

QNF Sales will notify the publishers and the Casket Corporation of the sale and each will forward their transfer documentation to the buyer. During this period the buyer will obtain finance, conduct “due diligence”, attend the newsagent and Casket training courses and undertake on the job training.

Advisors

It is important to have good legal and financial representation for the buying process. A due diligence process should be conducted prior to the contract of sale becoming unconditional to verify the legal and financial state of the business. For this process, an accountant and solicitor with an understanding of the newsagency industry is highly recommended. Click here for Newsagency Specialist Professionals.

Purchase Costs

On an average size newsagency, buyers should budget for additional purchasing costs of approximately 10% to 15% of the value of the Goodwill of the business being purchased. These costs include such things as stamp duty, legal & due diligence fees, application costs, bonds and training fees.

For more information contact us for a copy of  ‘Costs & Contracts—A guide to additional purchasing costs’.

Additional Training

There are additional training avenues available to incoming and prospective newsagents.

These are:

• The Newsagents Induction Course, conducted by the Queensland Newsagents Federation
• On the Job Training with the Seller
• Cert IV in Retail Management

The Queensland Newsagents Federation (QNF) Newsagents Induction Course is a 3½ day Information Seminar held each month for both prospective and in-coming agents.  The course involves instruction by major industry suppliers and practicing newsagents in the core aspects of the industry and the role of trade associations and marketing groups. For more information on this course please contact QNF at admin@qnf.org.au or on 07 3862 7100.

Sellers are contracted to provide the Buyer, at no cost, a standard of three weeks on the job training in the business. The timing of this training is a matter for negotiation between the Seller and the Buyer however, as a general rule, the best results are achieved with two weeks training being conducted before Settlement and one week after.

 
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