The Do’s of Bank Financing

Bank Financing is right for me if …

  • my company has proven historical and pro-forma cash flow
  • my company has developed an established and strong franchise
  • my company has an experienced management team I can provide the bank the ability and time needed to conduct a thorough due diligence

Bank Financing will provide my company…

  • the least expensive form of capital
  • to allow the owners to retain control of the business
  • a framework for establishing certain controls and discipline
  • access to other bank services

Before lending money the bank will want to make sure.. .

  • we have a proven management team
  • we have stable historical cash flow
  • we have good operating margins
  • we have solid publishing statistics
  • we have a strong ability to service debt based upon reasonable proformas
  • our revenue sources are diversified
  • they have access to capital

To be attractive to a bank my management team should…

  • be experienced in managing the current or similar publishing properties
  • have the ability to manage through economic downturns
  • have developed a reputation in the Industry
  • have made an investment themselves in the business
  • have experience in all facets of the business

A bank is going to take a good hard look at…

  • the value of our franchise
    • Length of time we’ve been publishing
    • our market niche
    • our market share
    • the competition
  • the reliability of revenues and EBIDTA
    • cyclicality of revenues
    • revenue base diversity
    • our margins
    • publishing statistics
  • direct and operating margins
    • direct margins over 50%
    • operating margins in the l5%-30% range
  • our circulation statistics
    • number of subscribers (paid versus controlled)
    • single copy versus subscription sales
    • sell through, renewal, conversion rates
    • price increases
    • source and cost of new subscriptions
    • controlled circulation statistics versus competition
  • our advertising statistics
    • historical page growth
    • discounting policies
    • market/type concentrations
    • market share
    • advertising/editorial ratios
    • reliance on advertising versus circulation revenues
    • new product/Internet revenues

Have questions about obtaining back financing? Need help writing or editing your business plan. The Grimes, McGovern & Associates team can help.  Call us today to confidentially discuss your own situation.

 

Grimes, McGovern & Associates provides expert advice during all phases of a transaction. Contact us today for a confidential consultation: John McGovern, CEO, jmcgovern@mediamergers.com, (917) 881-6563 or Julie Bergman, VP, Newspaper Division, jbergman@mediamergers.com, (218) 230-8943.

 

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