BookSmarts Podcast (ep. 38): Miriam Warren on International Mergers & Acquisitions
Miriam Warren is a Director at The Fisher Company, which provides international mergers and acquisition services for print and digital publishing media and technology sectors. Her eleven years in academic publishing give her a comprehensive knowledge of a publisher’s specific needs, from acquisition and peer review process through print and ebook production.
Miriam also served as President of the Board of Directors for PubWest for nearly six years. She joins the BookSmarts Podcast to discuss the process of The Fisher’s Company’s mergers and acquisitions and gives advice to publishers thinking about selling their company or acquiring an additional one.
What have you accomplished in the publishing world?
I’ve been in publishing for most of my life, mainly about 25 years. I’ve worked in trade publishing and academic publishing. I worked for Fisher books in nonfiction, a lot of health and medical titles, business strategy, and at the University of Arizona Press in the academic space for more than 10 years, handling their production, and integrating with the distributor. Then, I worked at Western National Parks Association as their Publications Manager, as far as managing the trail guides and other information about the parks that are sold to tourists. So, I’ve been with the Fisher Company now for about five years and all of that background has definitely been a help as each project is unique.
What is the Fisher Company?
The Fisher Company provides mergers and acquisitions services, in addition to business consulting. And for the most part, what we do is we help publishers who are ready to sell their companies, we help them find a buyer for their company.
How do mergers and acquisition help keep publishing running as an industry?
There have, unfortunately, been a lot of kind of negative thoughts towards mergers and acquisitions in publishing. That it’s fairly predatory. However, the majority of people we work with are people that are willing sellers. They’re not being hunted down, they’re not being taken advantage of. These are companies that are looking to move on to another level or looking to retire if it’s a an independent owner, which is often the case. We are in touch with as many publishers as we can, both in the US, North America, and internationally, to find the best matches that we can.
How does the merger & acquisition (M&A) process work?
When we start mergers and acquisitions with a new client, it’s often about three to four years before we actually work with them. It is a very long sales process, sometimes it can be even longer. There are clients that we’ve been speaking with and checking in with for up to 10 years, just every year, how’s it going? What do you need? Providing a little bit of guidance for their next steps.
When a company decides to sell, and they want us to represent them as their broker and as an advisor, what we do is we have several preliminary calls. We want to make sure that there’s a good understanding of, first of all, how we as The Fisher Company operate, and also how that specific publishing company is running, what their products are, what the audience is, and what their goals are in selling, whether it’s to raise more capital for getting the company to the next level, or if it’s really selling off a piece of it. Every single publishing company is unique.
We want to talk through valuations, so that there is a mutual agreement that this is how much we think your company is worth and this is what we believe we can get for you on the market. From there, we will enter into an advisory services agreement. We generally charge a retainer in addition to a transaction fee and these are all customized to the specific publisher as far as the revenues, the percentages, the profitability. Again, everything is unique. For smaller publishers that have lower revenues, we will enter into a consulting agreement to help them that way as far as making it more cost effective for the publisher. We don’t want them to lose all of their potential profit by paying us. That’s not helpful for anybody.
Once we enter into an agreement with our client, we go through another data gathering period of time and we put together a summary of the company so that we can present that to prospects. We’ll go over what your strengths are, what your revenues are, what your facilities are on your staff and, obviously, what the acquisition benefits would be to a potential buyer. From there, we review potential prospects with our clients. Unless we have permission to contact anybody and everybody we want, which is rare, we do not do that. This is in consultation with approval from the client. These are the buyers that we believe would be a good match and this is who we want to start with.
From there, we begin speaking with potential prospects, sign nondisclosure agreements, make sure that everything is confidential, of course, and once we have further interest, we invite prospects into an online data room which is populated with marketing information, sales, financials, legal operations, copyrights, contracts, etc. After we have interest, it really begins kind of a long cycle of Q&A between both the seller and a prospective buyer. Obviously, the buyer is going to have a lot of questions for the seller. The seller should also be asking questions of the buyer to ensure that the buyer is a good match for them. It can work both ways.
We want it to be a win/win situation in every single occasion that we can. That process can take several weeks or months. Once we have enough information to a prospective buyer and they are interested, then they will send over a letter of intent. It’s also called a Heads of Agreement, which outlines what their intent is to purchase the company, whether it’s a share sale or an asset sale, and then the financial details in the structure of the deal. From then, it’s another period of due diligence through to working on closing documents and that can take anywhere from several weeks to several months before closing.
After closing, we do still try and stay in touch with our clients. We want to make sure that they are receiving what they expected out of the deal and that everything is moving along well with transition.
What are the trends you’re seeing in the M&A space in publishing?
This has been building for several years, but increasingly, as publishing has become more digital as we’ve become more remote and able to speak with each other, international acquisitions are continuing to rise. Even if your company is in the US, there may be a publisher from France or another country that’s interested in establishing a United States platform company. So that is something that we really tried to keep in mind, as far as discussing with our clients, is looking for similarities in genres, and in formats.
Another trend that we are seeing is there’s a long period of due diligence up front before we are seeing offers presented to companies. Buyers are specifically wanting to take more time and review files much more in depth prior to an offer than post offer so we’re also seeing that there’s less time between an offer and the closing, if possible.
We are also seeing that more offers are made based on profitability levels versus revenue levels and that is a shift that that has been going on for a few years as well.
Where is the industry headed based on the trends of the types of people who are purchasing publishing assets?
I think it’s really, starting now, as we’re seeing this change in generations of publishing, we’re having more people come into the development and strategy positions that weren’t originally in publishing. So we’re seeing a little bit of a crackdown on really what the ROI is on purchasing a company and it’s really interesting to see. We’re seeing some really original, and, again, unique offer structures that we haven’t seen before. Oftentimes, there’s lower amounts on the down and then a higher earnout.
That’s also reflecting the change in wanting to have a lot of inventory on hand, whereas a few years ago, maybe 10 or 15 years ago, physical inventory held more value than it does today. The majority of distributors don’t want more than one to two years worth of stock. You’re investing in the profitability of the company and the actual, the IP, more than the physical product than we were before.
If you’re a publisher interested in M&A, what are the next steps?
There are a number of ways that you can reach out to us as a broker and also other brokers and consultants in the space. Like I said, this is a very long process so even if you’re not thinking about selling your company now, if you’re thinking about possibly selling in the next five years, it’s worth meeting with a consultant or an advisor just to kind of get a heads up on where you’re at and what you might need to start working on.
We’re seeing more and more publishers that have their contracts digitized because that is a requirement. We’re not shipping boxes of physical contracts around between sellers and prospects anymore. Everything needs to be archived digitally and available. If you’re a publisher that’s been around for a while, and you have some historical documents that need to be digitized, it’s great to go ahead and do that, if you haven’t already done that.
Another piece that we see often is that the author contracts are not assignable to a new buyer. So before you go into a selling process, you really want to get a handle on all of your author contracts and find out which ones will easily transfer. Those are a couple of items and there are plenty more. Reach out to advisors and consultants. Most of us really aren’t trying to pitch anything the first time we meet. I don’t like having to pitch somebody the first time I meet them. It’s better to just become acquainted with those of us that are in the industry and figure out who might be a personality match for you and who’s going to work best.
Learn more about The Fisher Company at www.thefishercompany.com. Email them today for a free consultation!