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Subject: What is FFG worth? rss

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S P
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I am not sure what FFG is worth but my guess is that all of you are well over the mark.
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Gary Simpson

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I'd say 2 million with inventory. Pretty sure if they had more they would not be located in Roseville, Minnesota (Go Raiders!).
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Beau Bailey
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gsimpson wrote:
I'd say 2 million with inventory. Pretty sure if they had more they would not be located in Roseville, Minnesota (Go Raiders!).


But isn't their annual revenue estimated in the $10-15 million range?

http://www.manta.com/c/mm5yy1g/fantasy-flight
http://www.startribune.com/local/east/15118981.html
http://www.inc.com/inc5000/2009/company-profile.html?id=2009...
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Mike zebrowski
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According to an article in the local paper, FFG grossed $8 million in '07.
(http://www.startribune.com/local/east/15118981.html)

Three years later, I'd guess that they are around the $14 million range in sales.

Most rules of thumb that I've heard for purchasing businesses is 3 times their annual revenue, so $35 million would likely tempt the owners of FFG to sell.

Mike Z
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Erik Tietz
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Mike Zebrowski wrote:
According to an article in the local paper, FFG grossed $8 million in '07.
(http://www.startribune.com/local/east/15118981.html)

Three years later, I'd guess that they are around the $14 million range in sales.

Most rules of thumb that I've heard for purchasing businesses is 3 times their annual revenue, so $35 million would likely tempt the owners of FFG to sell.

Mike Z


That type of valuation also depends on their profit margins. With all of the licensing that they have to pay, I'm sure it cuts into their profit.
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Eric Jome
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Mike Zebrowski wrote:
According to an article in the local paper, FFG grossed $8 million in '07.


Sweet! My guess would have been about $10M, so my intuition was right on.
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Wanda Davies
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cosine wrote:

Sweet! My guess would have been about $10M, so my intuition was right on.

Great job!
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Eric Etkin
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I can't offer Conan O'Brian-level money, but I'll give them $100 bucks for it.
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Mike zebrowski
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djcack wrote:

That type of valuation also depends on their profit margins. With all of the licensing that they have to pay, I'm sure it cuts into their profit.


True. Any buyer would have to do their due diligence and look at the books/license agreements/etc... while the final price is being negotiated.

I remember back in 2000 when WoTC purchased Last Unicorn Games. LUG had the Star Trek license and Dune License at the time. WoTC thought that both licenses would transfer with the sale of the company.

Decipher pulled off a coup at Gencon when they announced that they had acquired all rights for Star Trek games. Several WoTC execs were in a state of shock that weekend. To compound matters, the Herbert estate would not allow the license to transfer to WoTC.

So, WoTC purchased LUG and took on all of their rather substantial debt and all they managed to sell is 3000 copies of the Dune RPG that had already been printed.
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Radioactive Man
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Mike Zebrowski wrote:
According to an article in the local paper, FFG grossed $8 million in '07.
(http://www.startribune.com/local/east/15118981.html)

Three years later, I'd guess that they are around the $14 million range in sales.

Most rules of thumb that I've heard for purchasing businesses is 3 times their annual revenue, so $35 million would likely tempt the owners of FFG to sell.

Mike Z

That's if you're selling private shares of a stock. A good rule of thumb for a lot of businesses is a multiple of 3-5 on earnings per share. If you're selling the whole company, you have to add in assets, goodwill, intellectual rights, etc.
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Aaron Potter
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As it happens, this dovetails rather neatly with some research I'm working on for a planned article for an academic journal on game studies. I'll contact FFG and ask them.

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MOTHDevil wrote:
I can't offer Conan O'Brian-level money, but I'll give them $100 bucks for it.

$125
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Matt Davis
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Landstander wrote:
MOTHDevil wrote:
I can't offer Conan O'Brian-level money, but I'll give them $100 bucks for it.

$125


I'd give 'em a mint copy of Advanced Civ for it. Cards are still in shrink. Straight up.
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The Galaxy is Just Packed!
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badweasel wrote:
But isn't their annual revenue estimated in the $10-15 million range?


Revenue is not profit. Revenue minus expenses is profit. If a company sells 100 million in product and incurs 95 million in expenses, they are exactly as profitable as a company that sells 10 million in product and incurs 5 million in expenses.

What are they worth? Only their accountant knows.

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Beau Bailey
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bryanwinter wrote:
badweasel wrote:
But isn't their annual revenue estimated in the $10-15 million range?


Revenue is not profit. Revenue minus expenses is profit. If a company sells 100 million in product and incurs 95 million in expenses, they are exactly as profitable as a company that sells 10 million in product and incurs 5 million in expenses.

What are they worth? Only their accountant knows.



But a company operating for $100 million in revenue is generally worth more than one operating for $10 million in revenue. One is significantly less efficient, but barring any weird shenanigans (extremely high salaries, excessive capital investment) , the higher revenue company is worth more. That higher revenue company probably has significantly higher capital holdings (plant, buildings, etc.), greater market share, and so on which makes them more interesting to a potential buyer.
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bryanwinter wrote:
Revenue is not profit. Revenue minus expenses is profit. If a company sells 100 million in product and incurs 95 million in expenses, they are exactly as profitable as a company that sells 10 million in product and incurs 5 million in expenses.

I'd take the latter -- much better profit margins.
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Paul Lister
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bryanwinter wrote:


What are they worth? Only their accountant knows.



Accountants know many things, and they can certainly give a historical record of the assets and liabilities of the company but the worth is determined by what someone is willing to pay and this is based on projections of the companies future cash flow not its historical performance.
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Ian Klinck
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Warren dM wrote:
bryanwinter wrote:
Revenue is not profit. Revenue minus expenses is profit. If a company sells 100 million in product and incurs 95 million in expenses, they are exactly as profitable as a company that sells 10 million in product and incurs 5 million in expenses.

I'd take the latter -- much better profit margins.


But, if you can improve efficiency and shave 5% off expenses, the first one nearly doubles in profit margin...
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badweasel wrote:
bryanwinter wrote:
badweasel wrote:
But isn't their annual revenue estimated in the $10-15 million range?


Revenue is not profit. Revenue minus expenses is profit. If a company sells 100 million in product and incurs 95 million in expenses, they are exactly as profitable as a company that sells 10 million in product and incurs 5 million in expenses.

What are they worth? Only their accountant knows.



But a company operating for $100 million in revenue is generally worth more than one operating for $10 million in revenue. One is significantly less efficient, but barring any weird shenanigans (extremely high salaries, excessive capital investment) , the higher revenue company is worth more. That higher revenue company probably has significantly higher capital holdings (plant, buildings, etc.), greater market share, and so on which makes them more interesting to a potential buyer.


That is not necessarily true. Petrol stations have very high revenue but tiny margins for instance. It also depends on the size of the market, competitors etc etc.

Anyway there is an equation you can use as a start point to value a company although as said earlier a multiple of revenue is fine, although it must be one that is relevant to the industry.

The value of a business is the net current value of its future profits. So for FFG, assuming it is not publicly quoted, you take the industry price/earning (PE) ratio. From this you can adjust it for factors such as reduced marketability of their shares. As you know the earning per share, from their accounts, you can determine a price per share. This will give you it's value. Its a bit more complicated than this as you then have to allow for future earnings, quirks such as any usable past tax losses, potential growth, order book, market size, other assets it may have etc but as a rule of thumb it works.

To put it really simply you can think of their profits as income earned on the investment. So if say its 1 million a year profits and you want a 10% return, given all the risk factors etc of the business, then you are willing to pay 10 million.
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Sorp222 wrote:
bryanwinter wrote:


What are they worth? Only their accountant knows.



Accountants know many things, and they can certainly give a historical record of the assets and liabilities of the company but the worth is determined by what someone is willing to pay and this is based on projections of the companies future cash flow not its historical performance.


Accountants, at least in the UK, are trained to do this sort of thing. Historical figures only relate to Financial Reporting and Tax. Their relevance in valuations are well known and understood.

But as someone quite rightly pointed out earlier, it is worth what someone is willing to pay for it. So any valuation is just the starting point for negotiation.
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Pete Lane
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Mike Zebrowski wrote:
Most rules of thumb that I've heard for purchasing businesses is 3 times their annual revenue, so $35 million would likely tempt the owners of FFG to sell.



Knowing CP, he wouldn't sell until he owned everyone else first.
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coolpapa wrote:
Landstander wrote:
MOTHDevil wrote:
I can't offer Conan O'Brian-level money, but I'll give them $100 bucks for it.

$125


I'd give 'em a mint copy of Advanced Civ for it. Cards are still in shrink. Straight up.


Damn it.


Well, I'm out.
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stagger lee wrote:
Mike Zebrowski wrote:
Most rules of thumb that I've heard for purchasing businesses is 3 times their annual revenue, so $35 million would likely tempt the owners of FFG to sell.



Knowing CP, he wouldn't sell until he owned everyone else first. :)


From the little I know about FFG it does seem to be a good, solid business and very good at what it does. I bet there would be many tempted to give him an offer he can't refuse:) I suspect they get offers fairly regularly.
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Aaron Potter
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I just got a reply from FFG's director of Marketing, who, unfortunately, can't divulge the exact sales or valuation of the (privately held, he reminds me) company. Makes you wonder just what use he imagines people might make of such innocuous data. So y'all can feel free to guess whatever you like.

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Halfinger wrote:
Sorp222 wrote:
bryanwinter wrote:


What are they worth? Only their accountant knows.



Accountants know many things, and they can certainly give a historical record of the assets and liabilities of the company but the worth is determined by what someone is willing to pay and this is based on projections of the companies future cash flow not its historical performance.


Accountants, at least in the UK, are trained to do this sort of thing. Historical figures only relate to Financial Reporting and Tax. Their relevance in valuations are well known and understood.

But as someone quite rightly pointed out earlier, it is worth what someone is willing to pay for it. So any valuation is just the starting point for negotiation.


The valuation is usually the main subject of the negotiation in company sales - its extremely rare that buyer and seller agree on this (for starters they are unlikely to share the same cost of capital, or make the same assumptions about, which is a key driver of valuations) And whilst UK accountants can make a financial model of future cash flows which arrive at a valuation the key assumptions that underpin that valuation, the buyers discount rate and the buyers assumptions about future growth are what drives the price. In my experience the role of accountants is usually technical (i.e. building then updating the valuation for buyer or seller using a financial model from assumptions of revenue and expenses provided by one party or other).
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