The newsonomics of Forbes’ real performance and price potential
Financial documents being shown to potential buyers raise questions about its future growth. Has Forbes peaked? And can it justify the high price it’s seeking?
The bidding for Forbes is now moving into round two, with a sale expected within a month. A surprising set of largely non-U.S. buyers is flipping through the pages of a memorandum prepared by Deutsche Bank, which Forbes has tasked with shopping the property. A careful reading of that 62-page confidential document reveals a lot about the company’s much-heralded forays into new businesses. It also provides hard numbers that could only be guessed at in the press when Forbes’ owners (the Forbes family with a 55 percent stake and Elevation Partners with the remainder) put the company on the market in November.
Buyers expecting either some kind of strategic business model breakthrough or in buying badly needed publishing EBITDA (earnings before interest, taxes, depreciation and amortization) may be disappointed by the numbers. Revenue is significantly lower than public estimates of this very private company. The numbers show that the boundary-breaking Forbes may be faring a little better than its rivals, but it’s found scaling up both revenues and earnings tough to do.
In fact, over the past year, overall revenue growth has been cut in half. That’s got to be a red flag for buyers considering the story Deutsche Bank’s memo tries to lay out.
Overall, the numbers should point to the difficulty of obtaining the $400 million price Forbes would like to reach. The magazine company’s earnings just don’t justify anywhere near that valuation. But there is one big asterisk: The three non-U.S. companies that have an interest in heading to the next round may well be prepared to pay a premium for the intangible value of the brand and its global value going forward....MORE
