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Should I Buy This Studio
Old 1st June 2006
  #31
Lives for gear
 
crypticglobe's Avatar
Fellow Franklinite here. It is a rough business around here... owning a studio. However, indeed real estate is blowing up like crazy here in Williamson County... especially Franklin!! I live in a house my wife and I bought around 5 years ago for $115,000. It was just appraised for $205,000... and this bubble still has a LONG way to go before it starts to level out. The Nissan announcment REALLY helped too.

All that to say... hey George... can you PM me a link, or where I can go to get more information??

Thanks.
Old 1st June 2006
  #32
Gear Nut
 
foxonestudios's Avatar
 

Quote:
Originally Posted by George Cumbee
Who said it is a house?

This is a BUSINESS real eatate property....
oops, misread, i thought someone brought a house into the mix...either way, my advice about viewing houses as investments still stands
Old 2nd June 2006
  #33
Gear Maniac
 
Push845's Avatar
 

Quote:
Originally Posted by allencollins
Id hold out and wait for them to liquidate. With a little luck You can probably
get it at a bankrupcy auction for 100k. That's what's happening in my area

thanks to DAW's, Large studios are Dinasaurs. If their not they will be soon enough.

50% of multi Platnium bands/artists are recording at home now
It will keep growing too.

I'm not impying that I'm happy about this but it is the sad truth.
If you have 900k to spend your better off putting it in a money market or a cd
rates will be 7% by years end. You will make double in the bank than you will in a studio
Well said
Old 2nd June 2006
  #34
500 series nutjob
 
pan60's Avatar
 

Quote:
Originally Posted by Push845
Well said
what?
it's been made very clear that will not happen.
Old 2nd June 2006
  #35
Wow, Mr. Jaded-no. I'm glad I don't work at the places where you work.


Quote:
Originally Posted by Jim vanBergen
about buying a 925,000 condo office with an attached fire-pit into which you will throw money.

Assume there is NO repeat business and you will start from the ground up with YOUR business plan. Assume you buy all the gear piecemeal and it STILL has to go together. Unless you have worked in this studio before as a client and consider it a DREAM to work in, you will re-work it considerably. You will have to sell gear you hate and lose money on that. You will get screwed on EvilBay and lose money there. You will find that some gear does not function and you will pay extraordinary fees to make it work, to find you don't like the way it sounds and its not worth anything used.

Once you have blown your wad (let's asume for the moment that the 925k plus 10% in closing costs, 150k in additional renovations and the 50k you spend re-furnishing and advertising in the first two months is all gravy. You STILL have to find clients, make the gear talk to all the other pieces, and turn out killer work, while runnning a business and collecting money from deadbeat bands, churches, producers, and record labels who all think you are MADE of money. You own a studio right? You MUST be independently weathly, you must own several homes and a couple of boats, have off-shore holdings and TONS of cash because hey, you own a studio.

You'll have to hire maintenance engineers, a chief engineer and a second (for the night shift or the day shift, whichever is worse and more expensive) as well as A2s, a backline tech, runners, a secretary, an accoutant, a lawyer, an insurance agent, and an acoustic consultant to fix the hole in the control room wall where that nutty guitarist kicked it in when he could not play his solo right.

You'l have to invest in more backline, a studio van or truck to transport 24track machines, drum sets, congas and tympani, and oh, a VERY fukkin' expensive piano that will go out of tune every time you try to save a couple of bucks by dropping the thermostat over the weekend if the studio is not booked, or on the Monday/Tuesday the studio is not booked while the cleaning crew and interns are scrubbing the vomit from the couch, the coffee from the Soundcraft, the **** from the toilet seat, the speed from the coffee table, and the beer bottles from the kitchen area.

If you can afford to spend huge $$ on the salaries, expenses, maintenance, gear upgrades, repairs, vehicle, cleaning, advertising, accounting, and STILL look yourself in the eye after the first year when you grossed about 35,000 in work, gave away several MONTHS of free studio time, and made a $375,000 LOSS after that first year by scraping by... and wanting to go another year even if it means you lose another 400k...

then by all means, BUY IT!

JvB (jaded, no. Realistic, but maybe OVERLY a slight bit.)
Old 2nd June 2006
  #36
Here for the gear
 

Quote:
Originally Posted by Lynn Fuston
Wow, Mr. Jaded-no. I'm glad I don't work at the places where you work.

DITTO!!!!

Geez....
Old 3rd June 2006
  #37
Do not put a value on "keeping the old clients". This is not something anyone can promise - even with a truly commercial room that's just changing owners. People assume all sorts of things and may not bother to call based on those assumptions.

I do think there is some value in buying a place that's built out, in that you can start right away and you don't have to worry about delaying you're opening due to the build out taking an extra six months.
Old 4th June 2006
  #38
Here for the gear
 

Quote:
Originally Posted by Mike Caffrey
Do not put a value on "keeping the old clients". This is not something anyone can promise - even with a truly commercial room that's just changing owners. People assume all sorts of things and may not bother to call based on those assumptions.

I do think there is some value in buying a place that's built out, in that you can start right away and you don't have to worry about delaying you're opening due to the build out taking an extra six months.

The fact is that I worried too about that when I bought the room 9 yrs ago. Not only did we keep the majority of those clients, but added a lot of new ones and have maintained that. We continued in the same spirit and tradition that the room was built on and tried to make it even better by adding new modern gear and offering the same and even more services than before. I would hope the next owner would do the same, but that is not a guarantee either as to how a new owner WANTS to run the room. Lot of variables on their part. It just so happened that I wanted to continue it much the same way....

A lot of this is just the way we operate in Nashville. We have lots of regular companies calling all the time to book us. I turned down several days this month already just because we were already booked. It always seems everyone wants the same days. We have been blessed to have a lot of great clients who support us. But they buy the room and what we can offer for them...And we have clients from all over the country. Not just Nashville. People come to Nashville for the talent pool, both in musicians and singers as well as a wealth of great engineers and producers and arrangers. One of our best clients is from Dallas. He produces many projects a year for national and international companies. We are doing a big project in July for an arranger from Colorado who is hiring our room and all local talent, both music and technical to do a project for an artist from VA. We have had clients from as far away as Switzerland come in to do days of tracking with great players. I could go on, but I think you get the idea of how we operate....

Lynn could back me up on this since he has done a wealth of those national and international projects with us. It is not unusual for us to do say a rhythm few days and then the producer hops a plane to Europe and does orchestra and then back to us to do vocals. We do a LOT of orchestra also....
Old 4th June 2006
  #39
Lives for gear
 

Personally I wouldnt buy it, I'd get my own thing going.
Old 4th June 2006
  #40
Gear Maniac
 
JohnNy C's Avatar
 

Let me start by saying what some of these other guys said. Take away the gear, then price the land, and the building to see where it appraises at. Then, add in the gear and most importantly your clientel. Something you might not take into consideration right away, but building clientel for a business, especialy a pro studio, can be VERY hard. If the figures work out in your favor... by all means, swoop that thing up and roll with it. Good luck and let us know what you have decided to do.
Old 4th June 2006
  #41
Lives for gear
 
KevWind's Avatar
Just adding Some more thoughts

The basics of real estate and building value are that not hard and there are rules of thumb for buying a business also, like Tangible assetts which are land, building and fixtures, inventory or in this case equipment and then the intangible assets, business good will or in his case clientele, This is called Blue Sky its called that for a very good reason.

1. get your self a realestate agent or do the reserch yourself for the comparative land value , there will be a range of value for similar property of the same size and location.

2. try to find out about the construction type, size and matierials etc. of the building this will give you a $ Per Sq. ft. figure for value or cost of building a new one. Try to figure any cost for needed repairs or needed cosmetic upgrades

3. look at the equipment inventory list and try to figure what works for you and what doesn't

4. This stuff is mostly just straight forward addition and subtraction if this adds up close to the sale price. There is a lot to be said for not having go through the construction process for a new start up, its a hassle and always takes much longer than you expect.

. the only tricky part is this thing called Blue Sky. Be very carful how much you pay for Blue Sky the thinking of most good business people is, pay very little or nothing for it.

Good luck Kev
Old 4th June 2006
  #42
Here for the gear
 

Quote:
Originally Posted by KevWind
The basics of real estate and building value are that not hard and there are rules of thumb for buying a business also, like Tangible assetts which are land, building and fixtures, inventory or in this case equipment and then the intangible assets, business good will or in his case clientele, This is called Blue Sky its called that for a very good reason.

1. get your self a realestate agent or do the reserch yourself for the comparative land value , there will be a range of value for similar property of the same size and location.

2. try to find out about the construction type, size and matierials etc. of the building this will give you a $ Per Sq. ft. figure for value or cost of building a new one. Try to figure any cost for needed repairs or needed cosmetic upgrades

3. look at the equipment inventory list and try to figure what works for you and what doesn't

4. This stuff is mostly just straight forward addition and subtraction if this adds up close to the sale price. There is a lot to be said for not having go through the construction process for a new start up, its a hassle and always takes much longer than you expect.

. the only tricky part is this thing called Blue Sky. Be very carful how much you pay for Blue Sky the thinking of most good business people is, pay very little or nothing for it.

Good luck Kev

Agree....

Comps have already been done on this place which are indisputable I would assume. They are on the same street. Appraisal was done last summer for refi rate reduction and equity draw out. It even shocked the bank what the real estate was worth. It had doubled since I bought it....

One thing you have to remember about an existing business vs a start up. I have been in business around 30yrs. I walked into the bank in Franklin in 1997 and they did not know me from Adam. But I had a great financial history and that coupled with the history of this place was a no brainer for them. They would have loaned me even more than I needed. I have ran several million dollars through this place since then. How many startups in THIS industry can say that?

I would not even attempt to build a new place right now in this age. Just building materials alone after all the past year's disasters are worth not doing that on specualtion alone. We did a remodel and acoustic overhaul of the control room in 1998. It is one of the better sounding rooms in town I am told by many who work there. Lynn would not do his mic/pre comparisons there if it sounded bad. Ask him.

As for Blue Sky? I completely understand, but there is something to be said and some value to what I have worked to build and maintain. I should not have to give that away. Build someone a business and give it away? I don't think so. We have world class and renowned players, singers, arrangers, producers and engineers and national known artists working there all the time. How many startups can say that and what value do you put on that? Definetly worth something...

I am reasonable though...
Old 4th June 2006
  #43
Quote:
Originally Posted by George Cumbee
The fact is that I worried too about that when I bought the room 9 yrs ago. Not only did we keep the majority of those clients, but added a lot of new ones and have maintained that.
I'm not saying that it won't happen, just not to put a value on that when deciding whether or not to purcahse it.

The reason clients stayed is unknowable. It coule be a reflection of the room, of them or of you. The latter is the biggest issue.

Also, what was the market like 9 years ago? Were there more sessions that needed a studio like yours than were available? (That's rhetorical, btw)

The point is it's to variable an factor to be knowable, so the prucahser's business plan shold be made assigning that value to be $0. THen any cleints who stay put you ahead of the plan.
Old 4th June 2006
  #44
Here for the gear
 

Quote:
Originally Posted by Mike Caffrey
I'm not saying that it won't happen, just not to put a value on that when deciding whether or not to purcahse it.

The reason clients stayed is unknowable. It coule be a reflection of the room, of them or of you. The latter is the biggest issue.

Also, what was the market like 9 years ago? Were there more sessions that needed a studio like yours than were available? (That's rhetorical, btw)

The point is it's to variable an factor to be knowable, so the prucahser's business plan shold be made assigning that value to be $0. THen any cleints who stay put you ahead of the plan.

Another factor in all this is the value of the NAME, LOGO, WEBSITE, etc. All of those are established entities of value in a business along with the goodwil. If you went to buy say Coca Cola, would the NAME, LOGO etc not be a HUGE factor in the value of the company. And I am not that huge of a factor in the value of the clients staying. Until recently I was rarely there. I live 150 miles away. I had someone running it...
Old 4th June 2006
  #45
Lives for gear
 
KevWind's Avatar
Blue Sky

Quote:
Originally Posted by George Cumbee
Agree....

I should not have to give that away. Build someone a business and give it away? I don't think so. We have world class and renowned players, singers, arrangers, producers and engineers and national known artists working there all the time. How many startups can say that and what value do you put on that? Definetly worth something...

I am reasonable though...
George please don't misunderstand, when I was talking about Blue Sky I was not
suggesting that its not worth something.
Also I am not saying that you, should not wan't or don't deserve equity on all aspects of your business. I was advising the original poster that the land, building, and inventory are easier to get numbers on. The numbers on business income and expences are basic and certianly play a part in the purchase equation. But there are always intangible assets that are more difficult to assess, he should look at this part of the equation very carefully and from a business stantpoint not an emotional one.

But to further clarify. Since I am not commerical studio owner or employee and also not there in Nashville I certainly cant claim any expertise on this particular situtation.I was only making genral business suggestions, not definitive statements.

Lastly just so you know, If I was in Nashville, I might very well be interested in your studio. Best of Luck Kevin Roche. Jackson Hole Wy.
Old 5th June 2006
  #46
Lives for gear
 
Jim vanBergen's Avatar
 

Quote:
Originally Posted by Lynn Fuston
Wow, Mr. Jaded-no. I'm glad I don't work at the places where you work.
Lynn, and George-
First, thanks for specifying exactly what the studio IS and IS NOT. If I were looking to buy a studio, I'd be fighting to get a foot in the door (and I'd also get my lawyer and accountant involved for due diligence) and put in a bid.

And so that no one else thinks that I have either suffered all this crap myself, my post was not only MY last 16 years of experience in this business after finishing grad school and arriving in NYC thinking I knew everything , but fortunately, my post actually represents those sad experiences of everyone I know who has been a) unfortunate, b) had poor business judgement, c) ran headlong into a brick wall without enough backing or financial support, d) let themselves get taken advantage of by a co-worker, friend, or e) trusted the WRONG person.

I have tried to learn not only from MY mistakes but also from others. If I had suffered the slings and arrows I describe all myself, my personal studio would have beeen liquidated a decade ago and I'd be dreaming about Germaniums, Tridents, vintage Neumanns and new Porticos instead of looking at them above a sea of track sheets, deal memos and notes.

People are on this board for advice and opinions, which can be good and bad since sadly everyone has one, just like everybody's lower orifice. Sometimes I want to be the voice of reason, sometimes I'm the gearslut urging people to "BUY BOTH!", but when someone asks "should I plop down almost a million bucks" I urge caution, and to think thru the deal.

I'm sure that both George and Lynn EXPECT, not only want, a good buyer who understands the business and could grow or maintain it with aplomb, and not let it run into the ground or make those easy mistakes I have seen with HOW many start-up studios in NYC, LA, Miami, Toronto, Tampa, Orlando, Atlanta, Chicago, Boston, Philly (I never got a gig yet in the American Northwest, sorry!) but as a client who books studios around the country, I've seen some DOOZIES! I hope your buyer is not a first time studio owner, but a decent, knowledgeable, up & coming/moving from the city talent who manages to be HONEST and GOOD at what they do. The biz is hard enough as it is without another scumbag ruining the few nice, high-end places left to work. Can you tell I mourn almost a dozen dead and gone studios in NYC? Great places to work...just history. A shame!

Anyway...I hope that NONE of us experience everything I wrote (even SOME of it is bad enough, but the parts I went thru -those make me laugh, NOW!) and I hope you do not take anything I wrote personally as obviously, it was written as a point of caution before either of you had an opportunity to outline said studio's position, history, or facts, let along your personal stakes in the venture.

Much respect to both of you and best wishes,

Jim "Mr. Jaded" vanBergen
PS: never been the intern, but I'm still irritated by experience of finding the pile of speed on the coffee table. No class at all!
Old 5th June 2006
  #47
Quote:
Originally Posted by George Cumbee
Another factor in all this is the value of the NAME, LOGO, WEBSITE, etc. All of those are established entities of value in a business along with the goodwil. If you went to buy say Coca Cola, would the NAME, LOGO etc not be a HUGE factor in the value of the company. And I am not that huge of a factor in the value of the clients staying. Until recently I was rarely there. I live 150 miles away. I had someone running it...
That changes things a bit.

However, if I was buying the studio, every but of finiancial projections I'd make would be based on having none of the old clients.

I'm not saying that I don't believe the studio is likely to succeed, that's just how I'd make my projections.
Old 5th June 2006
  #48
One with big hooves
 
Jay Kahrs's Avatar
Quote:
Originally Posted by George Cumbee
Another factor in all this is the value of the NAME, LOGO, WEBSITE, etc. All of those are established entities of value in a business along with the goodwil. If you went to buy say Coca Cola, would the NAME, LOGO etc not be a HUGE factor in the value of the company. And I am not that huge of a factor in the value of the clients staying. Until recently I was rarely there. I live 150 miles away. I had someone running it...
So it's not JUST a "studio" for sale...

It's a real, functioning business?

That's a whole different animal then plunking down for some real estate and "tangible materials"...aka equipment.
Old 5th June 2006
  #49
Here for the gear
 

Quote:
Originally Posted by Jay Kahrs
So it's not JUST a "studio" for sale...

It's a real, functioning business?

That's a whole different animal then plunking down for some real estate and "tangible materials"...aka equipment.

That is correct.....
Old 6th June 2006
  #50
Lives for gear
 
lordmiguel's Avatar
 

can you really buy a relationship in this business?

a nice sounding space is definitely worth something, the rest is a sum of the parts.

am i missing something?
Old 6th June 2006
  #51
500 series nutjob
 
pan60's Avatar
 

i think blue sky is worth something the question is what and how do you calculate it.
how many customers can you count on and in this market it is getting somewhat more difficult to count on anything.
this is the gamble of a business you buy.
but you can try to build up a business and still you will have to roll the dice.
so what will you be more comfortable with.
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