4-4-13
While I was learning many things from the beginning, one thing that I knew without a doubt was that I would need an attorney and more than likely a banker or someone to help me with the financial side. Choosing an attorney was pretty easy. As soon as I realized I would need an FCC attorney, I remembered sitting next to this guy at the Marconi?s last year. He was kind and funny in a dry, attorney-type way. I enjoyed listening to him guess nearly perfectly who would win in each category. However, in order to do due diligence to the selection process, I sent off an email requesting references to a good attorney. When they came back, they matched the card I held in my hand?
That of one Mr. John Garziglia. Decision made. And, I?m very glad I chose him. John has the heart of a teacher and patience for this newbie. He?s very thorough, answers every question without making me feel stupid and fights for me fiercely when he feels the need. Finding solutions as it related to financing was the next and much bigger obstacle. I had so many questions:
? Where do I go for answers?
? How does getting financing work? What actually can be secured and how? What security would be required?
? What is an LMA, and do I want to do one? If so, under what terms?
? Do I need or want a deal where the owner carries some of the paper?
? If I seek out investors, how do I structure the deal?
? Do I work with a banker and if so, which one?
I asked all of these questions and more. The answers that came back were completely varied and all over the place depending on the position and history of the person involved. I decided to start with meeting a few local bankers and seeing what sparked. I called three banks. One never returned my call; another stood me up and the last was a friend that worked as a commercial lender. While trying to be supportive as my friend, he was clear that the bank had an abundance of money to loan and equally clear about how difficult it would be to get a loan from a bank for a radio station, especially since I was poor in capital. So far, it wasn?t looking good.
I was at a point where I was trying to figure out who to talk to next when the banker that stood me up called me twice and emailed me two times to try to reschedule. It turned out that we had a mix-up in our calendars. I was feeling frustrated at not being taken seriously, so I delayed resetting the appointment but reset it I did. And, I?m so glad that I did.
I?ll never forget the first day I sat in Todd Hoien?s office at Hawthorn Bank. He was attentive as I cast a vision for what I wanted to do and why I was very qualified to do it. Todd would ask me questions and take notes. He took me seriously. He posed the questions to me that I knew I would get:
? Is radio still a viable industry?
? How has satellite and iPods impacted traditional radio listening?
? What role does digital listening options and social media play in or against the radio industry?
By the end of our first meeting, it was clear that he not only saw the potential of my dream, but believed in my ability to pull it off and was interested in learning more. Since then, I have also explored every financing scenario possible, mostly while brainstorming with Todd in his office. He has truly proved to be a problem solver and engaged in the entire process, up to and including opening the bank early to participate on 5 way conference calls with me, John, and potential sellers.
He told me early on that he was in and wanted to help me make this happen. In fact, it was December 31, 2012 that Todd called with final confirmation. What a way to start the New Year, right? I was filled with hope at that moment. I had a bank that believed in me enough to back the process. I had a couple of friends that also believed in me enough to help front capital to make it happen. Life was looking pretty good at this point.
Here?s what I?ve learned from this process so far:
? Regardless of which direction you take, you must find someone that believes in your vision with you and wants to and is capable of playing an active part in making it happen.
? Small community banks have money to loan and are in need of qualified borrowers. Build your business plan and start talking to people. They are looking for the next hometown dream to invest in.
? Be prepared to be an advocate for the industry and do a lot of educating.
? Be very careful and selective.
Since starting this series of articles, I?ve received a great deal of support and advice. (For that, I am very grateful. Please! Keep it coming. I am genuinely learning and doing all of this as I go.) I am also very fortunate to have a small group of former clients who have become close friends that advise me. One of them told me something that I?ll never forget. While a bit provocative, he makes a great point: ?Erica, when you are selecting investors or partners, just keep in mind?who do you want to be sleeping with? Because, figuratively speaking, that?s how involved these relationships get. What your partner has, you have to deal with, as well, including their personal, emotional and financial baggage.? Well, I think that says it all, doesn?t it?
Next week, I tell about making my first offer. See you then!
Reach out to Erica about her journey erica@theruckusgroup.com
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