MicrostockGroup

Hi Microstockers,

Due to changes in personal circumstances, my partner (business) and I are thinking of selling our stock portfolio of almost 10,000 images. How do we begin to try to put a price on this given the fluctuations in sales and revenue and lack of clear understanding on what the future might bring.

Can anyone point us in the right direction. We believe we have a strong portfolio and it does generate a good income each month.

The portfolio is probably best seen here : http://shutterstock.com/g/eastwestimaging

Appreciate any bits of advice.

Phil (for EastWest Imaging)

Don't forget that the buyer also needs to make a profit... If the estimated earnings in five years is $96 875, the buyer could pay perhaps only $65 000 to make it worth to take the risk. Personally I think the portfolio is much more worth than $96 875.

There is not an easy answer to the original question, at least the buyer needs to see statistics on how the portfolio is performing money-wise.

I think that you will realize more of the value if you keep it under your control.

I am not sure I agree with "5 years worth of income assuming a drop in value of 50% per year" I know Lee Torrens is barely uploading and his microstock income has been maintained.

You could approach Yuri or Lookstat or someone to manage your portfolio on your behalf.

I am curious to know what kind of valuation you have on your portfolio?

I personally would never invest in such a hazardous business as stock photography just to get 15% in profits after many years, I would be much better off investing in something else.

Phil, I am sorry to hear you are in a situation that requires selling your portfolio.  You are one of the pioneers and top sellers in this business. 

I have no idea about selling your portfolio, but I certainly wish you the best of luck in whatever you pursue after this

Good to hear it is not some personal disaster

I hope you will post back when you have figured this out.  It may come in handy for a lot of us down the road...

I'd think that might be a good option too. Recent history is of course littered with examples of agencies who have bought collections and who have subsequently been proved to have lost bucket loads of cash in the process. For example it seems bizarre now that Jupiter paid $20M for Banana Stock's 15K images back in 2006 and now those images are loitering in the bargain basement of PC/TS. I think they'd struggle to offload them now for one hundredth what they paid for them.

With that in mind only those who fully understand the microstock model should even contemplate placing a value on a portfolio. Only a fellow long-standing microstocker or a microstock agency could understand the variables that will affect the likely income from a given portfolio __ and nobody better than Phil himself regarding his own port.

I would regard buying a microstock portfolio as a risky investment in a young and changing market. Personally I'd want to be reasonably confident of being in profit within a couple of years simply because so many things could change within that timescale. Basically it's a significant risk so any buyer is going to want the potential of decent rewards if it works out. From a buyer's perspective I reckon a portfolio's earnings over the last two years would be a reasonable starting point for negotiations to begin. I don't think I'd sell my own portfolio for two years earnings but then I don't need the money and I'm happy to take the risk on it's future earnings myself.

My suggestion is to incorporate a company and distribute the shares between you, your partner and maybe others. Then the shareholders can appoint a director/manager who will be paid according to an agreed rate and manage the port for the shareholders and distribute the dividends at an agreed time.

The shareholders can always replace the director/manager later.

Just like the seller wants the best deal, don't forget the buyer isn't going to just throw down large bundles of cash betting on the future.

Most small businesses sell for a price, in the range of 2-5 times earnings before interest and tax expenses are deducted.

This is based on current earnings and potential future earnings. The word current doesn't include 2005-2008 for example. Although history is interesting, the buyer will want a complete looks at the financial records for the recent year of income and expenses. You don't open the books until after they make an acceptable offer, then the negotiations begin.

Looking at the same thing that Paulie pointed out, two times the annual earnings would allow the buyer to recover their investment in 4-5 years.

I'm speaking of getting the images for very little money. Like cheap. Really cheap. My guess is that there are plenty of images that can be purchased outright for, say, one or two months projected earnings. As an example, if I had to sell rights to images in order to liquidate an estate for heirs, I'd take whatever I could get for a fast sale. Add to that those who just want to get out of the business of micro at any price. I could see a formula for a given portfolio that could yield profits in a few months.

That's an extraordinarily complex way of basically saying '2x annual earnings'.

^^^ Stock images have little or nothing in common with the financial 'stock market'. You might just as well try to compare a portfolio's value with that of sheep, pigs and cattle in another 'stock market'. If pork futures are rising in price it doesn't mean the portfolio's value will be increasing too.

If an agency such as DT or SS were to acquire stock images to sell, the agency would be in a position of competing with its clients (i.e. us). While some businesses do compete with their clients, it is often a bad idea. I wonder sometimes if Adobe got out of the stock image selling business partly for that reason.