Author Solutions is looking for a buyer
After a year with sales of $99.8 million and a net profit of $4.2 million, representatives from Author Solutions Inc. are looking for a buyer for the self-publishing giant. According to the offering memorandum, majority shareholder Bertram Capital, which made its first investment in ASI in 2007, is interested in “pursuing a liquidity event as part of the normal investment cycle.”
ASI’s projections for future growth could attract a new buyer, whether another investment firm or an industry player (Amazon, Ingram?) For 2012, ASI forecasts a increased sales to $110 million and net profit to $7.0 million. In 2011, sales increased by 13% compared to 2010 and the company recorded its first profitable year. Since 2008, sales have grown by $41.5 million with adjusted EBITDA going from a loss of $7.4 million to a positive EBITDA of $12.2 million in 2011. ASI sees growth coming from continued expansion of the domestic self-publishing market, international expansion, and leveraging its expertise in “other forms of content.”
in 2011, ASI generated about 63% of its revenue from what it calls publishing and marketing services and 37% from distribution services. One area of strong growth has been ASI’s partnerships with traditional publishers which generated sales of $15.6 million in 2011, a 170% increase over 2010, and are expected to grow to more than $23 million in 2012. E-book sales jumped 550% last year, but accounted for just $1.3 million. International sales reached $10 million last year, driven by sales in the UK where revenue was $7.1 million, followed by sales in Australia/New Zealand where sales were 2. $4 million.
ASI believes the January launch of Booktango, its free DIY platform for creating e-books with boosted sales; Although Booktango is free, ASI believes it will generate significant sales by selling an a la carte package of publishing and marketing services. New “products” launched in 2011 included a television advertising service that generated $1.7 million in revenue and Hollywood services that generated more than $3.5 million. According to ASI, of the 300 authors who submitted books to entertainment executives, 90 received at least one request for the book to be reviewed in more detail, and two titles were chosen.
On the cost side, ASI said it paid out $1.7 million in royalties to its “white label” (traditional publishing) partners last year. Its workforce totals 1,565 full-time employees, the largest number of which, 1,215, are located at its facilities in the Philippines which not only handle production, but also sales and marketing. ASI recorded customer acquisition costs of $11.9 million last year and said that of the 475,000 “leads” generated in 2011 (leads being defined as a request from an individual who provides ASI an email address and phone number and asks to be contacted by an ASI representative), he converted 5% into customers. The average cost was $550 with “first order” sales averaging $1,375 per customer. ASI estimates that the “lifetime value” of an author relationship generates $5,000 for the company. In 2011, ASI sold 27,500 editorial packages, up just 15 from 2010, but the number of titles completed increased 17% to 25,000. have been sold will increase to 30,700 in 2012 and 49,015 in 2015, while completed titles will increase to 27,400 this year and 44,811 in 2015,
Since launch, ASI has published 170,000 titles by 140,000 authors and reported a 90% satisfaction rating, with 20% of sales coming from repeat customers and 10% from referrals.
