Selling Your Catalog: Prepare for the End Game

Possible End Games

There are many paths to the end game; only a very few actual end games exist:

1. Sell the catalog to or merge with a strategic buyer (competitor);

2. Sell the catalog to a financial buyer (investment group);

3. Take the catalog company public, selling shares to the general public (IPO);

4. Sell the catalog to the employees (ESOP);

5. Sell the catalog to management (LBO);

6. Sell the catalog to existing partners buying out an interest (recapitalization);

7. Sell the catalog to a son or daughter (succession);

8. Liquidate the catalog and take the cash (liquidation).

Beyond these end games, the alternatives quickly become unusual and specialized; however, the bulk of catalog end games fall within these categories.

Immediately it becomes clear that having an idea as to the end game is preferable, as each of the end games demands different strategies and tactics. The tax implications alone require careful financial investigation to determine where the present and future benefits and liabilities fall.

If you spend five years preparing for succession, and suddenly the business must be sold to a strategic buyer, the financial outcomes can be entirely different. If the strategy is to sell the catalog to the top two managers, and suddenly liquidation is the only alternative, the financial harvest will be significantly different from what was originally anticipated.

In my years as an advisor to catalog owners and CEOs, I can count on one hand the number of owners who could clearly, confidently and consistently state and adhere to their end-game objective and note the strategic steps to its achievement. They are the owners who receive maximum value for their catalog companies at the time of harvest.

Financial, Intellectual and Emotional End Games

For most catalog owners, the end game is defined by financial objectives. The best end game is the one producing the greatest possible amount of wealth and the most favorable tax benefits.