This past summer I connected with a local owner who, for the last 15 years or so, has run a mildly successful website for musicians. It had been much more robust and was bought out in the ’90s, but he bought it back when the new owners ran it into the ground.
We met for lunch near King of Prussia with one of our advisers to meet and greet and explore possibilities. Bahama Breeze is as good a place as any, I suppose. We sat down in a booth, I had dressed a bit for the meeting, as had our adviser and the person we were meeting wore shorts, flip-flops and a black t shirt. And somehow that wasn’t in appropriate – a trick I have yet to learn. We ordered. I was going to have a lunch salad, but when everyone else ordered burgers, so did I.
NDA’s were passed around and he floated out his idea for a merger between rVibe and his company. He wanted to launch a new b2b music service, and merge it with our b2c service. The meeting went very well, everyone wanted to move forward and have further discussions (which is always my take on anything) and see where this would go.
When I got back, I checked out the revenue pro formas– straight double digit growth starting out the gate. It gave me both a red flag and the heebeegeebees – I had done a similar thing months previously, but had learned my lesson. Not everyone does, I guess.
A few email exchanges later, I found out he wanted to do a pink-sheet IPO where we merged with the one company and another he owns that is already public. I backed off – the possibility of liquidity past that point would have been a nightmare and no investor would have gone near it.
I will always explore a partnership, but am very cautious about signing a deal.