MCH Enterprises, Inc., has developed a “primer” on station valuations. Many people in the industry accept that reasonable multiples paid during station transactions are currently 1.25 – 1.5 times revenue or 5 – 6 times “cashflow”, and these multiples will change as marketplace conditions change. However, most people do not know why that yardstick exists. Our primer explains that and also describes the multi-faceted approach we employ when conducting valuations.
It is important for all potential sellers of media properties to remember these important points:
- Negative cashflow is not an asset;
- Buyers always determine what is paid for a media property;
- There are three numbers associated with the sale of a media property: What the seller wanted, what the buyer wanted to pay, and the final figure that gets published in the trade press after the transaction has closed.
For a printable version of our Primer on Radio Station Valuations, click here
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The question often arises as to “will you hold an escrow in this transaction?” While MCH Enterprises has served as an escrow stakes-holder in the past, due to recent changes in banking regulations and other governmental restrictions, we unfortunately are no longer able to provide that service. Click here for an answer to the question as to who CAN hold an escrow.