Tuesday, April 14, 2009

Hiring a Media Broker

At the risk of appearing self-serving (as I am a media broker), here are some thoughts on hiring a professional to sell your Radio/TV assets.

Should you hire a broker in the first place? There is a reason that the media brokerage practice exists, and it parallels that of real estate. Sellers have learned over time that media brokers provide a basket of services which net more value in a sale than any possible commission saved by trying to do a deal “direct.” Sellers have a business to run; in most cases, they simply do not have the time to run a sale process. Often too, buyers and sellers often clash, particularly if they are competitors. A media broker provides an often necessary buffer zone in the negotiating process.

Good media brokers understand the financial markets and how to best structure a deal that will actually get to the closing table. They have negotiating experience and usually, a relationship with the prospective buyer. They have a track record in working with counsel to complete the transaction documents (and work out business issue problems between the buyer and seller directly, which counsel often cannot do since they have to interact with opposing counsel). And most brokers provide escrow services, usually at no charge. Enough of the sales pitch.

What do you look for?

Integrity, honesty, and discretion.

Nothing beats experience. Choose a professional who has completed a lot of deals. Brokerage is a tough business; it takes a long time to get really good at it. Pare down your list of broker prospects to those who have proven track records.

Choose a busy broker. Deal flow brings deal flow. A busy broker knows the active buyers and the active financial participants.

Get recommendations. Talk with the brokers’ most recent clients. Ask your colleagues in the business for referrals.

Look for a broker who understands finance.

Look for a broker who understands your digital revenue initiatives. This is a new area for many broadcasters. A broker must be able to explain to buyers the benefits of digital revenue (which may not yet be apparent from your P & L’s).

Avoid brokers who promise a purchase price which defies logic. Many potential sale processes have gone awry when the seller hires a broker who promises a “sky high” price after ignoring broker prospects who presented honest expectations.

Look for a brokerage firm who is visible in the broadcasting community. If a broker operates in the shadows, he/she is probably not the ideal choice to get your project in front of the most able buyers.

Have a “beauty contest.” Narrow your list to the top three, and invite them in for presentations. The cream will rise to the top.


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