The single biggest decision that I’ll make this year…

[Del Holford]

To me it seems you have the ability to create and succeed in this business. This opportunity seems like a way to take a breather, recharge, and go at it again. You might love the purchasers of you business and want to stay connected; you might love the cable production; or you might hate them both and decide to crank it up again. Having done it once, you know the investment in personal angst and finances. Are you still young enough and strong enough to do it again? Do you want to?

HTH

Del
fire*, smoke*, photoshopCS2
Charlotte Public Television

[Nick Griffin]

Michael –

Wow! You mean someone besides me is also NOT at NAB? Okay. Here’s my two cents worth of ideas and lots of loose change worth of questions.

What’s the downside for you in this? Assuming the buyout price is reasonable — usually some multiplier of your annual earnings (before interest, taxes, depreciation and amortization, perhaps with a serious nod to your existing capital investment) — doesn’t seem like you’ve got a lot to loose. UNLESS you’re happy with the way your business is going, happy with your clients, they’re happy with you and life is all around good. If you’re happy why change?

Well one obvious answer is that if this outsider is that intent on moving into your market and you turn them down, they may just do it without you and you have a new, potentially stronger competitor.

What I don’t understand, and maybe you do, is what’s up with the lack of non-compete and why just 90 days? Are these two things big danger signs? Both seem extremely odd for one business purchasing another business. If they’re going to make it possible to invest in a big upgrade to your facility, why wouldn’t you want to stay around for a lot longer than 90 days? Granted, 90 days may be all you can take if the chemistry isn’t good and I’ve known a whole lot of entrepreneurs who simply can’t hack being just an “employee” after a buy out. But them not wanting more than 90 days? That’s just strange. Are these “grown-ups” or just someone with a lot of money to throw around?

As to the cable job, it could be a nice way to bridge this extremely dangerous period wherein many of us are forced to move into HD at prices which are likely to keep falling. Could be. Maybe. Perhaps. If any of us had a crystal ball we’d probably be in investment banking, not video production. The other thing about the cable job again comes back to being an “employee.” Do you have the stomach to just sit back and be quiet when someone over you makes stupid decisions? Personally, I like making my own stupid decisions.

Don’t know if this has been any help, but I would advise that you have both a lawyer and an accountant carefully examine the deal before going any further.

-Nick Griffin
“Some people say that I’m superficial. But that’s just on the surface.”

[Leo Ticheli]

Only when both parties win, is a contract a good one. Why is there such a short non-compete agrement? If your clients love you, why would they wish to be served by someone else? Why would they not ask you to serve them after the ninety day period, leaving the new owner out in the cold?

Sounds like you have many irons in the fire, a television production business, new products development, and the possibility of accepting a full-time job that could leave little time for your other various interests, not to mention a personal life.

Best or luck,

Leo

[Michael Munkittrick]

[Del Holford] “Having done it once, you know the investment in personal angst and finances.”

Sadly, yes. I recall the investment of time and th loss of that investment as I handed off the reigns last time, but I am growing a little older and I am truly kind of afraid of buring out. I work, work, work for years on end so that I don’t have to work when my free time matters. I’m just trying to convince myself that IF I do this again, that I’ll have the drive and interest to do it yet again. I’m already on my third business verture, all three pretty successful…not incredibly profitable, but successful just the same.

I deeply appreciate the input and will add it to my list of rationalizations as I move forward.

Michael Munkittrick
Gainesville, Florida USA

[Michael Munkittrick]

[Nick Griffin] “What’s the downside for you in this?”

Frankly, the real loss is in time. I’m pretty happy watching my daughters grow up, and even though I’d get a pretty good view of it while working for someone other than myself, I’m actually pretty frightened of the possibility that I might have to sacrifice something that I don’t see as of yet. The purchase price is more than fair although it’s not ideal. The dollars that are left in my hand after all is said and done would technically allow me to rebuild a good portion of my studio in a year or so…but as you know, once you step out of the spotlight, garnering that attention again takes three times the effort. As an odd side note to this situation, I sold my last studio to a very well known studio based in Miami in exchange for a turnkey operation that required only man-hours to make it generate revenue. That group lost interest when they found that the growth model for our part of the state is far slower than they considered. Ultimately, they dropped their ties to the area entirely and headed back to the metropolis. The group who has an interest in my current studio has less lofty goals and more realistic ambitions, which is why the concern is weighing so heavily.

[Nick Griffin] “what’s up with the lack of non-compete and why just 90 days?”

I’ve been asking myself this one too. The specifics are rather loose, but one of my “gimmies” is that I MUST be allowed to freelance within this market as I have a lot of business that relies on my work. The buyers’ representative stated that their contract does not prohibit me from working in this market after a 90 day transitional phase. My gut tells me that’s there some underlying madness to this plan of action that might be unconventional, but highly effective. I know that they are pretty serious about the purchase and we DO meet the need of a ready-to-roll studio with clients that generate a good revenue stream. However, even if they double the income to the studio, they will still not be able to support the model that they are implying that they will follow. Of course, my degree isn’t in business forecasting and business futures, so I leave that to the number crunchers, but it does leave a lot to chew.

[Nick Griffin] “I would advise that you have both a lawyer and an accountant carefully examine the deal before going any further.”

Oh, of course. As we speak, both my business attorney and my mother (who is a damned good lawyer as well) are reviewing the paperwork and “terms”. So far, there is nothing out of the ordinary. My accountant, who has not been there for a lot of the process thus far states that his review of our finances DO prove to offer a pretty stable platform to move into the broadcasting realm…which might prove to be the logical step for these guys. We have the contract to run the local “community access” channel and could conceivably earn the right to bid for the new NBC affiliateship (if that’s a word). So, their interest might be based on that, but that alone wouldn’t make sense considering where we are in the scheme of things.

I realize that this is not the end of my involvement in creative video and broadcasting, but it does feel like the free time will be missed most. I have got to admit however, the time gained while not sorting commissions to sales people, supplying benefits for employees even when business is slow and putting on suit and tie daily might be a nice change of pace. I suppose it all boils down to fear or responsibility…or in this case, fear of the lack f responsibility to some extent. It’s been so long since I’ve had anyone tell me what to do that I fear that I’ve lost the ability to function in that environment.

Thanks so much Nick. Anything further would be most helpful. I need the voice of reason that I lack to help me with the perspective view. Thanks again.

Michael Munkittrick
Gainesville, Florida USA

[Michael Munkittrick]

[Leo Ticheli] “Why is there such a short non-compete agrement?”

I misspoke apparently as there is no non-compete with verbage that states my inability to work within the market. The “non-compete” as it would seem is only while I’m on their payroll during the transition period. Once I step outside of the organization, I gather that they feel they will have a solid grip on the market, similar to our own over the years. I think that is a huge error on their part, but being on my own team…I’m keeping rather quiet about that.

[Leo Ticheli] “If your clients love you, why would they wish to be served by someone else? Why would they not ask you to serve them after the ninety day period, leaving the new owner out in the cold?”

THAT’S what I’ve been asking myself, but my attorney and accountant seem to believe that their goals might be more lofty in the respect that they aren’t interested in the video production side as much as they are the drect plug-in to broadcast. Our contract lays out some pretty specific language about our operation and ownership of the local “community access” network. We own all of the facilities and it could effectively garner an affiliation overnight. There is a lot of talk about NBC having an interest in becoming a truly local station. That would be a very profitable card to hold should their interest be in that specific arena. I’m in no position to run a network affiliate and truly could not put together the financing considering my current investments outside of the studio at present…and maybe that is the reason for the lack of interest in a real non-compete.

Does that make sense to you? I can say it, but it sounds kind of weak.

[Leo Ticheli] “Sounds like you have many irons in the fire, a television production business, new products development, and the possibility of accepting a full-time job that could leave little time for your other various interests, not to mention a personal life.”

Amen!! But that’s the reason that this feels like a potential option for me…I guess. My lights are doing well, my new dolly rig will be introduced sometime before the fall and I anticipate that our new program will be reasonably successful. I’m just not sure how much work one guy can do without his demise being impending.

All in all, my greatest concern is for my family. With my numerous health concerns, I wonder if I’m not literally working myself to death. I dispise the idea of working for someone else, but I am assured that I will have a voice in the direction of the cable company’s strategy. If I had a dollor for every company that I was told that from…well, I’d have a lot of dollars. I’m just kind of stuck in limbo and the weight that the question brings seems more than I have the capacity to rationalize given all of the different direcctions that I’m heading as of today.

P.S. Leo, did you get my email about reviewing my new “InfiniFlo Evo-Lite” lights? I sent a few messages through your site, but I didn’t get a response. We’ve been sitting through customs check after check with clearances in hand waiting for the first pallets to arrive (they were due in November 2005) and if you’re interested, I’d like to ge your ideas of them. Let me know privately at munkittrick[at]hotmail[dot]com.

Thank for the input Leo.

Michael Munkittrick
Gainesville, Florida USA

[Mark Suszko]

As you say, it’s on the cusp of needing a near complete overhaul to go HD, then this is the inflection point; you should either enjoy the payoff now, or ride the tiger for the next decade. Since you seem to have plenty of options open, I’d say cashing out now sounds good.

I would be curious to know if the deal also included the use of your name on their new business. Call me cynical or paranoid, but what if they plan to turn your studios into, say a production house for adult oriented entertainment? With your good name still on it?

I’m probably off base on that one, more likely they see an easy entre to a new Digital broadcast license for when the analogs all go dark in 2 years, and thy figure to multicast SD signals like a miniature version of a cable provider. That could mean a lot of revenue, but I’m not so shure I want to be the pioneer in that venture. Definition of Pioneer: the guy with all the arrows in his chest. or to put it another way: the early bird gets the worm, but the *second* mouse is the one that gets away with the cheese.

Anyway, sounds like you have plenty to do with the other ventures, if this feels like the right place to make a new chapter in the book of your life, do it.

[Michael Munkittrick]

[Mark Suszko] “I would be curious to know if the deal also included the use of your name on their new business.”

Yes, the name is the major factor as we’ve amassed a pretty good list of magazine credits and awards over the years. Our direct relations with places like The Golf Channel, Turner Broadcasting, New Screen Broadcasting and other regionally based media-savvy companies in need of our service (and all too happy to pay for it) are a driving factor in this sale and are directly relative to the asking price. Our old name, Spiral Design Studios was not only a means to allow the purchaser to start with about three years of solid profitability without even the slightest investment in marketing. That, in effect made them competitive right out of the box without the need to explain what they stood for.

As for your suggestion that they might use “my” good name for adult videos or even worse wedding videos, I have built the company to be successful in the direction that it travels. I’d be disgruntled to find that the business went that direction, but once it’s sold it would be no fault of my own should the new owners not be able to produce work in the fields that we so often succeeded. Furthermore, my personal name, while loosely mentioned in a lot of the media would be completely absent in ANY future publicity unless there is a collaboration between them and myself independent of them

[Bob Cole]

Michael, is it a cash upfront deal or are they telling you they’ll pay over time?

I’ve seen a close relative sell her business, only to find herself going into a new business: getting the new owners to pay her what they said they would. A big debtor has a tremendous amount of leverage to force you to renegotiate, if he claims that the deal was so bad for him that he is contemplating bankruptcy.

I’d ask my business attorney to lay out what your options are in the worst case scenario before going forward.

Congratulations on being pursued. You must be doing something right.

— Bob C

[Michael Munkittrick]

Thanks Bob. Actually, I made a similar mistake last time around. I accepted a pay-over-time option that included half now and