I did some research and found that I've written a half dozen posts about buying or selling a publishing company, so I figure it's time to do something about it. The first problem I encountered in looking for another small publisher to buy is that there is no central directory listing publishing companies for sale. So I've decided to try to start one:
Publishing Business For Sale Listings
All I need now is listings from people trying to figure out how to sell a their published backlist. But listing a publishing company or assets for sale is one thing, and packaging titles such that they will be worth a good price as either a turnkey publishing operation or as a valuable addition to the catalog of another small press is another. Reminds me of the commercial with the catch line something like, "Would you buy a used truck from this man?"
The most important asset any publisher has is the intellectual property rights to the works they publish. In the case of a self publisher, establishing who owns the intellectual property rights isn't too difficult. It's either the publisher or the publisher's estate, if the author who established the business has passed away. But you can't assume that any other small publisher has dotted all the i's and crossed all the t's in their author contracts. I've even come across small publishers who boast that they don't use contracts at all. They do business on a hand-shake, the old fashioned way. Well, that business isn't going to be worth much to a potential buyer unless all the authors the original publisher shook hands with are willing to put pen to paper for the same deal.
The most general measure used to value sole proprietorships and other small businesses is probably copies of their tax returns. It could be that I'm in with a bad crowd, but I've known people to present fake tax returns to a bank when applying for a mortgage (and there are plenty of banks that are happy to take their word for it) so a series of tax returns that a publisher allegedly filed with the IRS is hardly proof positive of business activity. I'd want both the statements and the contact info for all of the vendors and major customers the publishing company deals with, along with the legal authority to confirm the account activity with them.
When the executor of an estate needs to figure out how to sell a publishing company or how to to estimate the value of a publisher's assets, they have limited resources beyond looking at past performance and talking to the business relations of the publisher. The real problem, especially with a small press, is that the majority of the sales activity was likely due directly to the efforts of the publisher who has gone on to that great printing press in the sky. This is especially true with self publishers whose public appearances and promotional activities are what drove the sales. It doesn't mean that the assets of the business fall to zero value on the publisher's demise, but they become a risky bet at anything other than a steep discount.
I don't expect an immediate burst of activity to populate the directory page I just set up, but I expect, over time, there will be a few listings and a marketplace may begin to form. Both buyers and sellers benefit from a thriving marketplace where values can be established by market forces rather than guesswork. I'm not going to rush around setting up a new domain with a catchy name for the time being, or establish automated listings. Anybody with a publishing company to sell can contact me directly, and I'll manually add a listing to the directory. If there's enough interest, that's when I'll get serious and establish a real auction site. It's the internet entrepreneur's dream. Start out giving a service away for free, establish value, and then start charging:-)