Valuing Your Billboards When A Shareholder Wants Out

qtq80-ekZxLXSometimes you have to split up your company.  Perhaps your partner wants to retire or you are getting a divorce and your spouse wants half the business.  How do you place a value on your company?

The Amicable Approach

  • The best solution is to amicably resolve what your company is worth.  Small outdoor companies tend to trade for 4-6 times gross revenue and 8-12 times cashflow so a reasonable value for your outdoor assets is 5 times revenue less any debt or 10 times cashflow less any debt.  Your valuation might be less if you’ve got a plant which is wood, posters or rural.

When There’s Conflict

What happens if you and your spouse or you and your business parter disagree on the value of assets?

  • Hire an AICPA certified appraiser.  You want someone who specializes in billboard appraisals.  Paul Wright at Signvalue is one of the best.  If you can’t agree on an appraiser then each of you can pick an appraiser and the two appraisers can pick a third appraiser and the value can be the average of the two closest appraisals.
  • Conduct a draft.  Sometimes people don’t want to pay the costs of an appraisal or get appraisals which are wildly divergent.  In that case you might want to conduct a draft. The two parties flip a coin to see who goes first then then take turns picking which boards they want to own. This calls the bluff of someone who has unusually high value expectations.   It lets them try to sell the billboards at the price which they think they are worth.  If the billboards don’t sell they are usually willing to sell them to their spouse or business partner for a much more reasonable price.

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