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EXIT STRATEGIES

Business for Sale: North Carolina-Based Photo Studio
 

The snapshot: this North Carolina-based photo studio has corporate customers any company should shoot for. But when you look at the big picture, does its asking price make sense?
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Business for Sale

The business: Looking to get your business life in focus? Consider this company, one of the oldest and best-regarded photography studios in the fast-growing Charlotte, N.C., region. The current owner, a onetime employee who purchased the business from the founder's family in 1993, has carved out a profitable niche of corporate customers who rely on the company for advertising stills, billboard promotions, and mail-order catalogs. A snapshot of assets reveals $35,000 worth of conventional and digital photography equipment, including high-resolution cameras and a PowerMac computer; the big selling point is strong ties to about 40 blue-chip commercial clients. Essentially a one-man shop, this business outsources lab work and back-office activities. The owner wants to move on to another venture, but his independent contractors should help develop a new owner's vision.

Price: $200,000

Outlook: It's picture-perfect, so long as a new owner is willing to staff up enough to pursue the growth opportunities that the company's corporate ties could generate. (The current owner only recently hired part-time help to man the store while he's out on assignment, instead of simply closing his 900-square-foot studio.) There are plenty of opportunities, from weddings and other celebrations to proj- ects in the region's thriving high-tech community, for the company to try to market itself. A Web site does bring in some new business, but it needs to be revamped as part of an active marketing campaign.

Price rationale: What's fuzzy about this picture? Great company, unrealistic price tag. Photography studios currently sell for about 50% of discretionary cash flow (total cash flow averaged about $67,000 here for the past three years), plus the value of fixtures, equipment, and inventory (FE&I) -- $35,000 -- which suggests a figure of about $68,000. Another method that's sometimes used produces a similar price: three times monthly sales (which were about $10,000, based on the results in 2000), plus FE&I. A new buyer with aggressive growth plans might be willing to bid as high as $100,000.

Pros: For an owner with vision and marketing savvy, cameras plus commercial contacts could create a superstar studio.

Cons: You'll find yourself overexposed -- at least on the financial front -- if you pay a technicolor price for a black-and-white business. -- Jill Andresky Fraser

Financials
Gross revenues EBITDA* Owner's
compensation
1998 $149,900 $21,500 $62,900
1999 $127,300 $16,200 $53,000
2000** $121,000 $12,800 $41,300

* Earnings before interest, taxes, depreciation, and amortization.
** Projected.


Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Bill Dale at BizForte Inc. at 866-249-3678.


Please e-mail your comments to editors@inc.com.

Last updated: Apr 1, 2001




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