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To sell, or not to sell? Is that your question? Part 7

If you've thought of selling your radio or TV station(s), how do you know if now is the right time to sell? And how do you figure out how much it's worth? After all, no one wants to leave money on the table, nor do they want to put on a price tag so high that the sale never happens. If you are in the market to sell, or just pondering the possibilities, we've gathered some expert advice to help you figure out whether and when to pull the trigger.

Setting a price may be art as much as science, because the answer to the question "what is this station worth" is different for each potential buyer.

"The key goal is selling a radio station is to find one or two buyers that have either a perception of value or a willingness to pay that is 10, 20 to 30% higher than what the normal buyer would pay. There's a 'logical appraised value,' then there's the natural buyer and the emotional buyer. The natural buyer is usually an in-market buyer or a first-time Spanish buyer - - somebody who can do exceptional things, ratings and revenue-wise, with your station - - or efficiency-wise. If a buyer is in-market, they can cut costs at almost all levels and therefore produce 50% higher cash flow than you can produce operating as you are now. The goal in selling a station is to find those emotional and natural buyers and create a little competition so they don't bid at a comfortable number, they bid at the highest number they're willing to pay," broker Tom Gammon told us.

Trying to get a rise from him, we asked, if there's a natural buyer, why do you need a broker?

"They don't always need one, number one. Number two, if the broker is really competent, they'll get a bigger number. I may get in trouble with some of my colleagues, but if a broker gaps to the middle, which is common in real estate and radio brokerage, you may not get the best price. For example, they hear the seller's point of view - - $3 million. They hear the buyer say $2 million. Then they spend the next month trying to get everybody to two and a half million. When in fact, the buyer might have been willing to pay $3.2 million to keep it from going to his competition, because it's worth that to him. But they [the broker] don't know what its worth to him. They don't know what cash flows he's figured he can get. So, yeah, there is some danger in hiring a broker. There's some danger in hiring a broker that gaps to the middle. They're just trying to make a fee. So they make a fee of $100,000 because it went down at $2.5 million, instead of believing it's worth $3 million or three and a quarter and trying to create competition - - and, in fact, maybe getting that for the seller," Gammon explained.

This article, in its entirety, appears in the August issue of RBR Solutions magazine.