I closed a deal in 2018 on a business called Radio Express. It’s in the radio content niche, based in Burbank, CA.
This was a very interesting deal with THREE big lessons. Let me tell you the story…
Radio Express creates content and syndicates it to hundreds of radio stations across the U.S. and beyond. The average local station doesn’t have the budget to create its own content so it licenses it.
Radio Express produces custom audio content for large corporations and charities, including Coca Cola and Storm Aid, respectively.
I happened to have an upcoming event in Orange County, CA and was planning to visit L.A. anyway.
Radio Express had been on my radar as a potential acquisition target, so I scheduled a meeting with Barbara, the owner who had decided to retire and sell the business.
Barbara had founded the business in 1985 with her husband who had passed away a few years earlier. Though the business had shrunk from $6M in revenue to $2M, it was still profitable. It also had a strong team and a solid opportunity to grow back to its previous size.
The day we were supposed to meet, I was surprised to receive a text message from Barbara inviting me to brunch at her house in the Hollywood Hills instead.
This was exciting! I had done such a great job at building rapport, the seller was inviting me to her house (It was our first meeting, after all.)
But now I needed a rental car.
When I got to the car rental desk, the car I should have received had been totaled. The only car they had left was a bright yellow Corvette Stingray.”
I thought about my meeting. Do I really want to rock up in a bright yellow sports car? What will the seller think?
This could going to go one of two ways: It was either going to strengthen our rapport… or utterly destroy it.
I thought about getting an Uber but didn’t think that would look particularly good either. I needed a car, time was ticking, so I made the call.
Ninety minutes later I pushed the buzzer at Barbara’s gate. She sprinted out of the house and immediately said, “Wow! I just LOVE your car. Please will you take me for a spin in it?”
So we cruised around the neighborhood. She even took my picture next to the car and shared it on her Facebook page.
The gamble worked because now she thought I was cool!
After brunch, she took me to see the business and meet the team incognito (they weren’t told I was a potential buyer.)
I loved BOTH!
Unfortunately… I knew NOTHING about radio content syndication.
There was a good team in the business, but it needed leadership and direction. I knew I needed a partner to be my CEO because I wouldn’t be able to run the business from the U.K.
I scratched my head. Who did I know?
Aha! I knew a DJ in London who happened to own a smaller, complementary business as a side-hustle.
I called him and proposed merging his business into Radio Express. He would be the CEO leading the team, and we’d split ownership: 60% me and 40% him. (Once I helped get the business to a certain financial level, we’d become straight 50/50 partners.)
Done. Problem solved — I now had a partner and CEO who would run it.
The last barrier I had to hurdle was the closing payment. Though Barbara only wanted $300K for the business (a very small multiple of profit), she wanted ALL of that money at closing.
Negotiation 101: Find out exactly what the seller truly values and build the deal around that.
So I asked Barbara, “What does the perfect deal look like for you?”
There was a list — and it had nothing to do with $300K…
First, the team was like her second family and she needed my assurance that I wouldn’t get rid of ANY of them.
Done.
Second, I couldn’t change the name. Radio Express had been around for more than 30 years and had a proud standing in the industry.
Done! Easy.
Finally, she looked at me anxiously and told me she didn’t want me to change the logo.
WTF!?!?
When I inquired as to why, she told me that her late husband had designed it — it had even won a competition back in 1985. She wanted to retire knowing it would stay.
I wanted to pay her the $300K over three years via deferred payments, or seller financing. Could we get to a win-win outcome if I agreed to her three demands?
Well, there was one more thing…
Barbara wanted to cover her $10K in closing costs AND treat her granddaughter to a cruise. So she needed $17,500 cash at closing.
Since there was WAY more than that in the business’s bank account, I agreed to the deal (pending due diligence, of course.)
We took over ownership on July 1, 2018. Here’s Paul and I celebrating with the team at the closing dinner.
There are three KEY lessons to be learned from this deal:
To this day, the name and team are still intact.
However, my partner did take the initiative to design a new logo because the old one was really outdated. Out of respect, we shared it with Barbara before pushing ahead.
With a little time and space away from the business, she ended up feeling less sentimental about the old logo, absolutely LOVED the new one… and was happy for the switch.
All’s well that ends well.
Until next time, bye for now.
