The American Dream

THE BUSINESS Confess it--every time you hear about a new-media company, you salivate. So here's the buzz: This is a Florida-based marketing-communications firm with a roster of brand-name national clients. Think advertising, Generation X-style (everything from Web design to surfing the Internet for trade strategies to aid clients). The company's nine staffers, all under 30, have at least two computers apiece and a cross-media network, so they can work on multiple projects. The owners want to cash out and bring in a new owner with growth capital; the owners and other staffers--including a business-development manager--would stay on if offered employment contracts.

PRICE $2.2 million (with flexibility on terms, which could include a payout tied to performance)

OUTLOOK Nationwide, advertising spending is $175 billion and rising. There's growth potential here, thanks mainly to the company's investment of about $600,000 in state-of-the-art computers and software. Sales were down earlier this year after the loss of a key client; since then the firm has broadened its customer mix, executed more long-term contracts, and insisted on more up-front fees.

PRICE RATIONALE Ad agencies typically sell for 75% of annual revenues, with some type of earn-out arrangement involved. In this case, that would suggest a purchase price of $1.4 million. But buyers who value this company's high-tech system might want to factor in part of its $600,000 cost. Start your bid at $1.5 million to $1.75 million, but if this team attracts interest from consolidating agencies, it could get much more.

PROS With hot clients and even hotter technology, this business could wind up with the potential to go public.

CONS Stall out instead, and you'll be just another new-media wanna-be. --Jill Andresky Fraser

Financials 1994 1995 1996
Gross Revenues $884,766 $989,835 $1,809,102
Recast Earnings* $71,791 $54,720 $194,984

*Before depreciation, interest, taxes, and owners' compensation

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 Justin Talerico at 561-394-9484.

Published on: Jan 1, 1998