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Chapter 65 Transaction Details

Chapter 65 Details of the transaction

Author: TrojanRW

Chapter 65 Details of the transaction

Using the music festival proposal as the prelude to the acquisition negotiations was originally a lobbying strategy formulated by Han Yi in advance.

"Lean On" released by Mad Decent is still the most watched single in Spotify's history until April 2016, no doubt. In other words, from the perspective of traditional record business, as an independent label that is not dependent on any group, Mad Decent has done a good job. I want to impress them in this regard, saying that after acquiring equity, it will increase investment and help the label create more phenomenal singles like "Lean On", I am afraid that the other party will find it difficult to pay.

The reason is simple. Han Yi is a professional who knows the pop music industry, including Diplo, Kevin Kusatsu and Jasper Goggins. They all understand one thing, that is, in the music field, it is easy to create a popular music that can be on the rankings, but there has never been a fixed success formula to incubate the champion single of "Lean On".

Even if Diplo's Major Lazer and DJ Snake create a new Moombahton according to the template of "Lean On", they invest ten times higher than "Lean On", and there is a high probability that they will not be able to achieve the same results as the original song.

Music, especially pop music, has always been like this. In other words, whether most entertainment products, including movies, TV series and even YouTube videos can become famous in one go is extremely random. The market's aesthetic preferences at a certain period of time, the natural traffic of promotion channels in a specific month, the subtle changes in the audience's likes and dislikes of current events, and even the charts and sales performance of the same type of singles, countless subtle factors will affect the final commercial performance of a song.

Therefore, Han Yi's strong capital may help Mad Decent improve the contract conditions for artists, increase the marketing team's music promotion budget, and comprehensively strengthen the brand's influence in the original electronic music market, thereby increasing the probability of phenomenon-level singles. However, there is no way to ensure that Diplo and his team will surely quickly gain more income in the short term.

This is the transaction condition that Diplo and its partners are most concerned about - how to cash out immediately, so as to freely use the cash you get and do more of what you want to do.

“It's all about them greens bro, it's all about them greens.”

Han Yi is very clear about this, so the entry point he chose for this negotiation is global tours and large music festivals that can see benefits in the short term. Whether it is the former or the latter, the settlement cycle is much shorter than the long-lasting music streaming revenue.

Han Yi's condition to Diplo through Jordan Bromley's mouth was to add Block Party, a live event brand, to the asset package.

After the merger is completed, Han Yi will use Han Music to contribute 100% of the overseas tour costs and Las Vegas Music Festival costs. As an IP holder and management team, Mad Decent will retain 30% of the gross profit, and Han Music will be divided into another 70%. If any loss occurs in the performance, Han Music will also bear it independently.

This kind of transaction that is reliable for Diplo, Kevin and Jasper, is undoubtedly a desperate bid. Even if they sell 50% of the equity of record companies, live performances and artists' peripheral sectors to Han Yi in accordance with the acquisition agreement, Diplo can still obtain 15% of the new tour sessions without paying a penny.

Take a step back and say that even if overseas tours and Las Vegas Music Festivals have huge losses, they will not have any actual losses.

Of course, on Han Yi's side, he can actually get much more than his negotiating opponents. 70% of the performance income belongs to Han Music, and about half of the 30% that Mad Decent can get into his wallet. In other words, as long as he can ensure positive cash flow for overseas tours and music festivals, Han Yi can get 85% of the gross profit.

As the original tour of Mad Decent North America, Han Yi, as a new shareholder, can also get about 50%.

This is the way of making money and trading for capitalists. They are rough and direct, use cash to lead the way and speak with strength. This method sounds like a frown, but in reality, it is impossible to make anyone feel disgusted.

Just imagine, if someone could throw out tens of millions of dollars to acquire half of your company's equity, and then invest tens of millions of dollars to help you grow your career, how many people would keep a clear mind, stick to the so-called original intention, and choose to refuse?

The difference between capitalists and ordinary people is reflected here. The former regards capital as a means to achieve goals, while the latter regards money as the ultimate pursuit of life. Everyone can talk about ideals and enthusiasm loudly, but when mountains of green banknotes are placed in front of you, how many people can choose the latter between financial freedom and maintaining corporate control?

For Thomas Wesley Pentz, the main reason for his becoming "Diplo" is not to let his music be remembered forever, or to push Mad Decent to become the fourth pole of the music world. These achievements are great and timeless, but they are too far away from him. If he wants to climb these two mountains, he is definitely not something he can accomplish, or in other words, he wants to accomplish.

As I mentioned in the interview in my previous life, he made music, performed performances, and built a brand, and had only one goal, which was to make as much money as possible when he was still young, so that he could experience all the life he wanted to experience.

In fact, there is actually not such a big gap between the so-called ordinary rich people and capital giants. The opportunities in front of everyone are not far apart, but the one or two choices at critical moments - whether to continue moving forward or set up camp, all in or cash out - will create an insurmountable gap between people.

Dr.Dre's choice is to maintain absolute control over Aftermath Entertainment, devote himself to managing newcomers, and successively launched two rappers of different eras, Eminem and Kendrick Lamar. At the same time, he boldly tried to cross-border, entered the electronics industry with Jimmy Yowen, founded the Beats headphone brand, and finally, after more than ten years of hard work, he became a real top tycoon with a worth billions and a share of the pie from Apple.

Diplo, who was not as professional and aspiring as a white man born in Mississippi and grew up in the deep south, was not like Andre, who had a sword that "black entrepreneurs can never truly succeed" hanging above his head, holding his might to break the secular shackles.

The cynical Thomas Wesley Pentz wants to be in this life, just a pirate captain of the new century who is roaming all over the world.

$36 million is enough for him to do this.

This was the final agreement of the acquisition amount under the leadership of Jordan Bromley after three hours of data verification and lengthy negotiations. With $36 million, Han Yi will buy the master copyright of all 820 singles of Mad Decent, 55% of the copyright of all event brands and artists and labels.

This has brought the total valuation of Mad Decent to $65.4545 million. You should know that the last time industry leader Spinnin' Records was only a little over $100 million. Spinnin' Records has a total of 3,829 singles with a master copyright, which is more than 4.5 times that of Mad Decent. Even if the asset package sold by Mad Decent this time includes live performance brands and artist peripheral brands, $36 million is still a very generous offer.

It is worth noting that unlike UTA's financing method of increasing capital and expanding shares, this time, Han Yi directly acquired the equity from Diplo and the label co-founder Kevin Kusatsu. Kevin Kusatsu sold 8.25% of the equity, which left him with 6.75% of the minority shares. Diplo will split the remaining 46.75% of the equity from 85% of the equity. After the acquisition is completed, the number of shareholders of Mad Decent will increase to three.

Kevin Kusatsu, Diplo and Han Music.

When everything is settled, Diplo and his manager will finally reach the financial freedom they have dreamed of at the beginning of their debut.

Han Yi's original music kingdom will also expand its first territory.

Of course, in addition to this, there are many small details in the negotiations worth discussing. Diplo's party asked to clarify the minimum amount of investment in the Mad Decent live performance brand in the acquisition agreement, and hold at least ten overseas tours with an investment of $15 million. The Las Vegas music festival requires at least $20 million to meet the necessary expenditures for activities of 50,000 people.

Han Yi agreed to the requirement to clarify the amount in the agreement, but he also proposed three counter offers - first of all, Diplo is not allowed to establish a new music label within five years, and his record contract must be performed at Mad Decent for at least ten years, and he cannot use his position to terminate the contract early, otherwise Han Yi has the right to recover all investment funds and ask for 120% compensation. After all, Diplo is the absolute core of Mad Decent, and Han Yi must ensure that he can continue to produce valuable content for the label for a long time, rather than having a ruthless heart when he gets cash.

In addition, Han Yi asked that Mad Decent needs to ensure that its core artists, including Dillon Francis and Baauer, must complete all obligations stipulated in the record agreement. That is to say, no matter whether they sign a 1+3, 1+4 or 1+6 360-degree contract, all renewal options need to be activated in turn. Without written confirmation by Han Music, the artists must not be given up in advance and terminated their contracts with them. If the core artists are lost due to force majeure factors, Han Music can recover part of the funds at three times the average advance payment for each album.

This is better understood. Whether it is a music copyright distribution company or a record company, the most important asset is artists. They are also a solid reliance on Han Yi's future push to Han Music onto the path of capitalization. Whether singles and albums make money is not the case. At least the agreement and rights must be held tightly in the hands of others.

The last condition proposed by Han Yi is that in the upcoming investment press release, Kevin Kusatsu must announce his joining management and become a senior partner of TGO Management. Of course, Han Yi will not pay him any salary, and Kevin does not need to hand over his income to the company.

What Han Yi wanted was just Kevin Kusatsu led his client Diplo to join the management of this public relations gimmick. Whether it was Diplo or Kevin Kusatsu's other musician customers, they would still maintain independent management, independent accounting, and independent revenue.

The reason for doing this is because TGO urgently needs a leading customer to attract new artists Han Yi and Zhao Youzhen are about to meet. With the popular diamond record producer Diplo as a golden signboard, Yuzhen's next contact will be easier.

In the entertainment industry, the most important thing is the two A, appearance and attractiveness.

Glossy packaging, with the attractiveness that comes with it.

Only with these two things can TGO be considered to have truly stabilized its position in the field of artist management.

After some discussion, Diplo and Kevin accepted all the conditions proposed by Han Yi, and then put forward a team incentive proposal after the acquisition was completed, which was also the final agreement reached by the negotiation parties today. Diplo and Kevin's suggestion was that after the equity transaction ended, Han Music, as the absolute controlling party, should issue an incentive dividend to 32 employees of Mad Decent, including CEO Jasper Goggins, to boost morale. Let employees see the sincerity of the new employer and allow them to stay in Mad Decent more stably to shine and heat.

Han Yi has no objection to the issuance of incentive dividends itself. After most acquisitions are completed, the company will leave a bonus to the core team. In fact, the first company acquired by Han Yi, United Artist Brokerage Company, operates in this way. As long as the established revenue targets can be completed in this fiscal year, each person can distribute the incentive dividends of a total of US$23.75 million according to their performance.

The team cannot think that they should share a piece of cake just because the boss sells shares. If an employer or acquirer really pays the bonus immediately after the acquisition is over, it would be really stupid. This reward method that can be rewarded for nothing will only destroy the original incentive mechanism within the company and breed the employees' insatiable habits of greed.

Once the warriors who serve you are used to getting rewards before going to the battlefield, instead of returning to great victory and then rewarding them according to their merits, then the army will not be too far away from falling apart and defeating.

Therefore, Han Yi conditionally agreed with the proposal of the acquisition target - after the acquisition is completed, Mad Decent will have a $2 million bonus pool. As long as the label can exceed the minimum annual income set by Han Yi, then as CEO Jasper Goggins will first get 40%, and the other 60% will be distributed according to work among the top 50% of employees with the best performance.

If you can be in the top 50%, congratulations, you will have the opportunity to receive a high bonus equivalent to your annual salary.

If you are the bottom 50%... Unfortunately, in Han Yi's company, there is no need to be the bottom 50% of people.

The hour hand is about to point to seven o'clock in the evening. Jordan Bromley's paralegal finally drafted the memorandum of cooperation. After reviewing it, both parties signed the memorandum and took a smile on the front desk of Manat Entertainment for future press releases. The next specific process will be until Jordan has sorted out the text of the final investment agreement, and Han Yi also gets all the funds needed for the acquisition from Carlyle Group and continues to advance.

A welcome party added many unexpected arrangements to the life that Han Yi was originally in control, and he gradually began to empathize with the busy schedules of those business tycoons. In his previous life, Han Yi would sneer at the interviews that were not enough for 24 hours a day. After all, in his opinion at that time, most of the work was assigned to the employees below. What billionaires needed to do was to cut ribbons everywhere, hold meetings, drink tea, and chat. What was there to complain about?

But when Han Yi became the person who was looking for people to chat, his original ideas and opinions collapsed almost instantly. At 7:00, he shook hands with Diplo and his group and said goodbye. Without even having time to take a breath, he directly got into Feiyamu's Chevrolet, followed Jordan Bromley's Black Bentley Continental and rushed to the next negotiation location.

Drive on Santa Monica Avenue, heading west, slowly squirming in the traffic flow of Luocheng, which is beyond the end. Their destination is a beach resort that Han Yi was definitely familiar with in his previous life but had never visited in this life.

1104 Wilche Avenue, Santa Monica, Mélisse Restaurant.

There, Kevin Hart and his Hartbeat team were looking forward to it.

The $399 million that has not yet been obtained has been promised to go out 18%.

Han Yi wanted to see how many more he could write in one day, which was definitely not a huge check from the short seller.

(End of this chapter)
Chapter completed!
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