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Should I Buy This Studio Effects Pedals, Units & Accessories
Old 31st May 2006
  #1
Gear Maniac
 
audioalchemy's Avatar
 

Should I Buy This Studio

Keep in mind as I say this that I still have to do some research as to the complete gear list etc. I have come across a studio just outside Nashville that has come up for sale. They are asking $925,000 (through a realtor). The ad says the studio has been a successful operation for 17 years. Price includes all gear etc, as well as current clientele.

It has what looks like an older soundcraft console, a large live room w/ 2 iso booths. Price also includes a condo office adjacent to the studio.

What do y'all think. Is something like this a good way to go instead of building a studio from the ground up or am i asking for trouble.

thanks,
AudioAlchemy
Old 31st May 2006
  #2
Lives for gear
 
Yoda117's Avatar
 

you should buy it straightaway!!!


and then give it to me
Old 31st May 2006
  #3
imho, you're asking for trouble EITHER WAY.

good luck
Old 31st May 2006
  #4
Gear Maniac
 
Hobbyist's Avatar
 

It sounds cool, but really think it through.

Where is it? What kind of clientele? Why are they getting out? Strip away the studio and see what the real estate is actually worth....I know very few studio owners around here that are loving life nowadays....

Most folks are cutting basic tracks at good places and then going home for everything else (and that's on the high end!).
Old 31st May 2006
  #5
Moderator
 
TonyBelmont's Avatar
 

Quote:
Originally Posted by JYoder
Strip away the studio and see what the real estate is actually worth....I know very few studio owners around here that are loving life nowadays....
Agreed.
Old 31st May 2006
  #6
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Do your due diligence. How much of the purchase price is represented by hard assets and real estate? How much is intangible value related to the ongong business? I'd break the pieces out and see how solid the valuation is. Hard assets can be valued by comparables, e-bay, etc. Intangible value related to the ongoing business is a bit trickier. Will the facility need upgrading and repair? It may not be as attractive if you have to immediately dump more money into it to fix things or to get them to how you really want them. Will the current clients stick with you? Do they pay? Are they kind of clients you want? It also needs to fit with your business plan.

I do a lot of business transactions. Feel free to PM me if you like.
Old 31st May 2006
  #7
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phelbin's Avatar
 

Quote:
Originally Posted by Pohaku
Will the current clients stick with you? Do they pay? Are they kind of clients you want?
This could potentially be the biggest risk of all. Is there a lot of repeat business? Are they coming back for the studio or the engineer...who I suppose will be leaving. I know that most of my clients are there for me...not necessarily where I work.

Do you already have a client base that will come over with you?
Old 1st June 2006
  #8
Lives for gear
 
allencollins's Avatar
 

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
Old 1st June 2006
  #9
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lefthando's Avatar
 

Quote:
Originally Posted by phelbin
This could potentially be the biggest risk of all. Is there a lot of repeat business? Are they coming back for the studio or the engineer...who I suppose will be leaving. I know that most of my clients are there for me...not necessarily where I work.

Do you already have a client base that will come over with you?
This is really important.

Are you paying for clients that will not stay?

If so, you will have to rely on your own clients, which is what you would do with a studio you build yourself.
Old 1st June 2006
  #10
Lives for gear
 
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So, you're thinking...

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 1st June 2006
  #11
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superburtm's Avatar
 

does this price include ownership of the actual land (real estate) or are you just buying the business for them. IF it's the latter,,,uh run the other way. I'd say it it sounds high regardless for Nashville. I'd buy a fricking house in nashville for 200 grand and buy a vintage api and all the frickin outboard you can stand and turn the living room into the tracking room for way less than 925,000.heh

but that's me
Old 1st June 2006
  #12
Gear Guru
 

Quote:
Originally Posted by audioalchemy
The ad says the studio has been a successful operation for 17 years. Price includes all gear etc, as well as current clientele.
My guess is that the best you can hope for is that they introduce you to their current clientele and recommend you to them. How can they deliver their clients? (unless they are clients who paid for their sessions in advance!) The clients could desert in droves once they found out their beloved engineer "Frank" is leaving.

Or as someone else pointed out, they might not even be the kind of clients you want.

What would the real estate be worth without a studio?
Old 1st June 2006
  #13
Lives for gear
 
superburtm's Avatar
 

Quote:
Originally Posted by joeq
What would the real estate be worth without a studio?

my guess without seeing it in nashville no more than 400 g's
Old 1st June 2006
  #14
500 series nutjob
 
pan60's Avatar
 

invest some good stocks, build a studio on the side.
Old 1st June 2006
  #15
Lives for gear
It's a business decision.

No. 1: Value the tangibles. Value the real estate as it would sell without any modifications. Value the gear as it would sell within 15-30 days.

No. 2: Don't get sucker punched into buying good will or clientele. The studio business is in too much flux at present to buy into this one.

So, if the hard assets (broken up) exceed the purchase price, then it might be worth it.
Old 1st June 2006
  #16
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djui5's Avatar
 

If you have to ask.....
Old 1st June 2006
  #17
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Sigma's Avatar
knowing the state of TOOO many studio hours available and TOOOO little clients to fill them in Nasville I'd say NO!
Old 1st June 2006
  #18
Gear Nut
 

The studio business has radically changed in the past few years. If you build it they may not come. If you have clients that are ready to follow and support this move, then go on to the next step: a close look at all the financials. An existing client base doesn't carry much weight in the new studio reality.

David Brown
Studio owner for 16 years
Old 1st June 2006
  #19
Gear Head
 

When I was involved in the resale of a business (retail), the best money spent was on a (good) business attorney and an "A" level accountant. Those guys working together saved us WAY more money than they cost us. Furthermore, they hammered on US about how we were going to make a go of it once we owned it. They found lots of flaws in our business plan and we had to prove that we could still make it work. We were a little star-eyed until they got through with us.

The original asking price by the previous owner was $300,000. We paid about $40,000. Then we had to re-establish the business which cost about $160,000. If we had paid the previous owner even $150k, we never would have made it.

You can do a lot of the "due dilligence" work yourself, check with the county for potential problems with the land, zoning, assessments, taxes, etc. Build a business plan with UNDERSTATED numbers for sales and OVERSTATED numbers for costs. See if it even possible. Plan for LOTS of advertising expense. I believe that this is the most often overlooked part on the business plan of any business.
Everyone thinks they can use a "built-in" clientelle or word of mouth. Plan for the worst. You need big money for the first few years to get established.

Just a quick meeting with an accountant who works with other large studios would be worth the $200.

Good luck!
Old 1st June 2006
  #20
Here for the gear
 

This is a very interesting thread to read since this is my place for sale.....

To answer one of the first questions raised. That is a DDA AMR-24 console, not a Soundcraft.

The studio IS is located in a very expensive real estate area and the large part of the price is the value of the real estate which has almost doubled since I bought the studio 9 yrs ago. The location and currrent development in the area will result in this being worth even a lot more in the future so this is a true investment. I moved my studio business from another state and merged it with this one. I am in the process of semi retiring due to age and over 30yrs in the business. The business is doing very well and is a well known, reputable place with a history of outstanding service to the industry. It has been well maintained(by me for 9yrs). It will never go to bankruptcy or liquidaton due to my financial setup. So that is out of the question. Hope that answers the basics. I cannot go into major detail since the realtors are to handle that....

They(realtors) do have the extensive equipment list which features some great gear. This is no chezzy deal. Our clients are clients who book the room not me. I do have my own clients, but a big majority of the regulars were here when I bought the studio and DID stay since they are reputable record/publishing companies and they like our room and they pay their bills. Most all bring their own engineers. We schedule assitants who know the room. We're known for rhythm tracking, medium orchestra and a lot of choral work. We are known for having one of the best pianos in Nashville for rhythm work. A lot of people book us just for the piano and it goes with the gear.

If you are truly interested I would suggest you consider checking with them. There are several people very interested in this investment.

George Cumbee, Pres
Audio Creations Inc., Paducah, KY
dba Classic Recording, Franklin(Nashville), TN
Old 1st June 2006
  #21
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Pohaku's Avatar
 

Small world, eh?heh
Old 1st June 2006
  #22
Gear Nut
 
foxonestudios's Avatar
 

Quote:
Originally Posted by George Cumbee
The location and currrent development in the area will result in this being worth even a lot more in the future so this is a true investment.
being a real estate professional by day, i'm gonna have to suggest that the best you should ever hope for out of your house is about a 1% return...anything on top of that is gravy...

read up on this great businessweek article too

http://www.businessweek.com/print/ma...01.htm?chan=gl
Old 1st June 2006
  #23
Here for the gear
 

Quote:
Originally Posted by foxonestudios
being a real estate professional by day, i'm gonna have to suggest that the best you should ever hope for out of your house is about a 1% return...anything on top of that is gravy...

read up on this great businessweek article too

http://www.businessweek.com/print/ma...01.htm?chan=gl

Who said it is a house?

This is a BUSINESS real eatate property....
Old 1st June 2006
  #24
I opened this thread with the intent of stating how ludicrous it is to ask a question like that on the internet. It's sort of like asking "Should I marry this woman?" on an internet forum.

Then I realized that the studio in question is one where I've worked hundreds of times. If you've ever seen or read about or heard any of my comparison CDs, then you're familiar with it because all of them (except the Ribbon Roundup CD) were recorded in that room.

It's a very comfortable place to work and feels like home away from home to me. I spent all last summer there working in the "office" (not the control room) after selling my house post-divorce.



The biggest asset? The real estate. Over half the asking price and worth it. Cool Springs, Franklin. If you know the area, you know what that's worth. Nissan's corporate headquarters are under construction just across the interstate. Lots of labels all over the place, many within 1-2 miles. This is the new Music Row. It's a boom town, has been for the past 15 years.

The biggest risk? The state of the industry. So what else is new? I've worked at this place since about 1994. It's gotten better and better. Solid equipment. Solid construction. And darned solid customer base. I enjoy working there a lot. I was just in this past weekend. For my money, it's a service based studio and they bend over backwards to make sure the clients are taken care of. When I'm the client, that's what I want. The owner has jumped in his car and chased UPS trucks around the neighborhood trying to get my packages when deliveries were missed and there was equipment that I needed being shipped in for that day.

Needs cosmetic updating. Needs a new vision. George has a grandson and his priorities have changed. He used to be as excited about trying out new preamps and mics as I was. Now he'd rather play with his grandson and fly his airplane.

I know one thing for sure. It's not a fire sale. There's no rush. This decision has been contemplated for several years now and it was just time to take action. The studio was booked four days out of five this week. Weekends are not promoted or typically booked, so there's growth potential.

Take a look at the inventory and mic collection. Great piano. Two inch Otari 90II. (Is that an asset?) 48 channels of iZ 24/96 RADAR. PT HD (which with RADAR converters is very useable). Solid reputation. Solid business. Lots of good will associated with a 15+ year reputation.

If you're looking to start a business from scratch and build clientele from the ground up, this may not be for you. But if you want a studio where you can work on your own projects in between the existing clientele's bookings, this is a great opportunity.
Old 1st June 2006
  #25
Here for the gear
 

Thanks Lynn.....

Just to clarify....That pic in Lynn's post is not the main control room. That is a shot that Lynn made in our front room while he was there with some of his gear in the shot. It is an office converted to a mix room.

Pictures and equipment list are available from the realtor...

And I STILL do like to try mics and pres and other gear. It is just like anything else in life that passions and priorities change over time. After having cancer 6 yrs ago a lot of mine did change. I look at life a bit different now. I still love the business and making music. I still work a lot of 10,12,16hr days like I did in the 70's. But times are different and I like a lot of other things also....

My new grandson IS the light of my life along with my wife of 36yrs and 2 grown daughters and son-in-law. I want to spend more time with them. But, if God still wants me to keep doing this, that is OK too.

Hey, and that 2" Otari is not in the sale list.. It can be if someone wants it. And I have an MX-80-24 2" also I can throw in.....
Old 1st June 2006
  #26
500 series nutjob
 
pan60's Avatar
 

George Cumbee i see your posts over at Lynn's site from time to time, nice to see you here as well.
also nice to hear this is not someones failing venture being pawned off on some poor unwitting individual.
hope you stick around.
Old 1st June 2006
  #27
Here for the gear
 

Quote:
Originally Posted by pan60
George Cumbee i see your posts over at Lynn's site from time to time, nice to see you here as well.
also nice to hear this is not someones failing venture being pawned off on some poor unwitting individual.
hope you stick around.
Thanks, I had to jump in and defend my honor :-)


I will....I will hopefully be a client of the room if they will let me....
Old 1st June 2006
  #28
Quote:
Originally Posted by George Cumbee
Thanks, I had to jump in and defend my honor :-)


I will....I will hopefully be a client of the room if they will let me....

Very cool, nice to have you here George.
Old 1st June 2006
  #29
If you want to see pictures of the control room and studio, check out this thread. It's not specifically about the studio, but there are lots of pictures.

http://www.3daudioinc.com/3db/showth...hlight=classic

The pictures are on the first two pages of that thread.

By the way, I have no vested financial interest in Classic. I'm just very familiar with the studio, have lots of history there, and am trying to help a good friend.
Old 1st June 2006
  #30
Gear Maniac
 
audioalchemy's Avatar
 

Thanks

George,

thanks for posting and talking about the studio and why you are selling etc. i plan to find some time to check the place out. seems like a killer space.

thanks again,
AudioAlchemy
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