Best Buy Purchased Audiovisions Assets for $7 Million, Filing Shows

When Best Buy purchased Audiovisions last year, the details were shrouded in a bit of secrecy. Now some Best Buy documents are shedding new light, along with details of another purchase we never heard about of an integrator called Howell & Associates in Burlington, Ontario, Canada.

Best Buy's buyout of Audiovisions, the No. 18 company in the 2004 CE Pro 100 list, was much ballyhooed. However, the exact dollar figures spent were never publicized...until now.

Best Buy's own Annual Report Form 10-K filing with the Securities and Exchange Commission on May 10, 2006 lists that the company purchased "certain assets" of Audiovisions for $7 million.

That dollar figure sounds about right, since most purchases of companies are based on a multiple of their EBITDA (earning before interest, taxes, depreciation and amortization), or cash flow for short. In many industries, buyouts often equate to between 2 and 5 times cash flow. In 2005 Audiovisions reported earning $7.43 million in revenue in the CE Pro 100. I am not privy to the company's cash flow.

The key, however, is that the Best Buy documents state that only "certain assets" of Audiovisions were acquired, still leaving some wiggle room in trying to determine how the purchase price was determined. As CE Pro reported when the buyout first occurred, Best Buy is looking to possible emulate the successful Audiovisions operational model elsewhere.

Meanwhile, the same Form 10-K document refers to the purchase of Howell & Associates, a full-service integration company based in Burlington, Ontario, Canada, for $1 million. According to the company's Web site, it is run by Clinton Howell. Howell & Associates' revenues are unknown, so I can't speculate on the purchase price vs. the company's EBITDA. Best Buy already operates 118 Future Shop stores throughout all Canadian provinces and 44 Canadian Best Buy stores in Ontario, Quebec, Alberta, British Columbia, Manitoba and Saskatchewan.

These purchases bring to mind questions about how to determine the value of your own integration company. That's why CE Pro and EHX have developed the first-ever CE Pro Business Valuation Summit taking place at EHX Fall on November 16 from 11:00 am to 5 pm.

Attendees will find out how much their business is really worth by examining certain metrics (that can also be used to obtain funding from banks and investors).

Participants for this exclusive half-day event will include potential buyers of custom integration companies, successful sellers of companies, and experts in legal, financial and business operations who’ve consulted with hundreds of integrating and retailing firms on mergers, acquisitions and the securing of capital for business expansions.

I invite you to go to the EHX Web site's registration page and sign up now.