Hi all

Longtime poster and lurker here. Incognito

I am involved in purchasing a commercial recording studio.

What things would you look for in deciding what a place is worth?

I could buy with all the gear, some or none. It has great gear. It has
a nice buildout.

I have the clientel already and the studio also has it's own clientel.

I have the inventory list and have been pricing everything on Ebay
etc.

I have been to the studio many times and am going to do a walk through
with the inventory list next.

The building is leased.

Thanks for the help

In article writes:

I am involved in purchasing a commercial recording studio.
What things would you look for in deciding what a place is worth?

I could buy with all the gear, some or none. It has great gear. It has
a nice buildout.

I have the clientel already and the studio also has it's own clientel.

Will the old clients stay with the studio (and you)? That's probalby
the most important thing to consider when buying a business, which is
what you're doing if you buy it with all the gear.

Do you like the gear? Is it a good deal, or would you end up replacing
things too soon to make any money from the investment?

The building is leased.

That's somewhat of a disadvantage. How will the owner treat a new
owner? What does the lease say about this? He may be able to cancel
the lease, tear down the building, build a parking lot, and make more
money.

The real question is how you'll make the most money, or if you'll make
money at all. That's a function of both the cost and the client base,
and those are things that should be between you and your banker, not
between us here in the newsgroup.


--
I'm really Mike Rivers )
However, until the spam goes away or Hell freezes over,
lots of IP addresses are blocked from this system. If
you e-mail me and it bounces, use your secret decoder ring
and reach me he double-m-eleven-double-zero at yahoo

The building is leased.

That's somewhat of a disadvantage. How will the owner treat a new
owner? What does the lease say about this? He may be able to cancel
the lease, tear down the building, build a parking lot, and make more
money. BRBR

In many studio markets (like NYC) a lease is a given. When I sold my studio
years ago I had three years left on a ten year lease. The prospective buyer and
I approached the landlord and renegotiated a ten year lease with a reasonable
increase in year one. The landlord started receiving a slightly higher rent
than she would have right away, and the new buyer had the peace of mind that
there were ten years going forward.
The equipment often pales in value to the leasehold improvements. Calculate
what it would cost you to put up all those double walls, sound locks, wiring
etc in TODAY's dollars. Add to that the time you will need the space while you
are not making money, and your own lost earnings during this period. The
existing leasehold improvements will be of value for the duration of your stay,
where the latest computer based audio gear will have a MUCH shorter useful
life.
How many years are left on the lease? If less than five, then the leasehold
improvements have less value. Try to see if the studio owner and landlord will
sit down and renegotiate the lease for ten years to protect the value of the
installation.
Is the current clientele loyal to a particular engineer who you might want to
keep on staff? You need a serious sit down with this type of pivotal person as
well BEFORE the closing.
The equipment might be fun to look up on ebay, but the more important parts of
the equation are going to be the likeleyhood that the clientele will remain,
and the exisiting infrastructure that's saving you the tens, perhaps hundreds
of thousands of dollars in new construction costs and more importantly the
unbookable time until you are up and running.
Good Luck.





Kevin M. Kelly
"There needs to be a 12-step program for us gearheads"

"wintersky" wrote in message
om...
Hi all

Longtime poster and lurker here. Incognito

I am involved in purchasing a commercial recording studio.

What things would you look for in deciding what a place is worth?

I think the most important thing is determining if you can make a living
with it & return an acceptable degree of investment in an acceptable length
of time for any partners who may be involved. That might sound rather
obvious, but if you're buying a place with a Neve & a Studer and a
brand-new PTHD rig, plus a stellar vintage mic collection for $100k, then
you're probably getting a great deal, but if that place is in a location
that's unnatractive or inconvenient to potential clientele, or the business
has (for whatever reason) generated a bad reputation that you're going to
have to fight to overcome, then it may not be such a great deal. Anything
apart from that (like what the assets are worth now vs. what they might be
worth later) is almost immaterial, and speculation at best, even if you
know the marketplace; because the marketplace can change. Also, why are
they selling? Is the owner retiring, or is he selling because he's been
losing money? If it's the latter, then can you reasonably expect to do
better in the same facility?

I have been to the studio many times and am going to do a walk through
with the inventory list next.

If you decide to buy it with all the gear, make sure that everything is
itemized & included in what you both sign off on. That way you won't show
up the day you take over to discover that things are missing.

The building is leased.

Get a document from the landlord that states he'll extend the same lease
terms to you that are in the current lease agreement. Even if you're buying
the business, chances are he's got a lease agreement with the current
owner, not 'the business', and you want to make sure that he won't take the
opportunity to triple the rent when you go to convert the lease over to
your name.
--


Neil Henderson
Progressive Rock
http://www.saqqararecords.com

If by "commercial" you mean TV and radio etc spot audio, then the 2nd
most important
aspect of the business is LOCATION. Simply, how many ad agencies are
within walking
distance of your studio. Do not underestimate the importance of
this--agency producers keep the creatives on a very short leash, and
generally will not go to a studio that they
have to drive to if they can help it. Other than that, the look of
the place and the creature comfort aspect will help sell the agency
folk on spending lots of time there (good for you),
that and doing great work REALLY FAST.

The 1st most important thing for your business (which has nothing to
do with the studio itself) is the image of your studio you develop in
the agency people's minds (convenient, pleasant, fun, accomodating,
great work FAST), so you become part of their normal workflow, a known
and necessary component of their routine. This is the hardest
thing of all to do, and often requires a real Sales Dept. to keep the
schmooz on.

Philip Perkins CAS

"wintersky" wrote in message ...

I have been to the studio many times and am going to do a walk through
with the inventory list next.

The building is leased.

Thanks for the help


All I can say is... "overhead". In a leased building it's important to know what
the landlords will do for you. Will they fix the A/C or the hot water heater when
it goes out or is that on you? How much do you stand to lose by purchasing a
'finish-out' that possibly cannot be moved if you decide to leave? Add up the
overhead of a commercial building and see if it makes sense... don't forget
that in addition to the lease (as well as the purchase note on the gear and the
finish-out), that you may have a rapidly accumulating set of expenses - like
an alarm system, telephones, common area maintenance costs, the electric
bill, the water & sewer bill, the trash pick-up bill, and options like DSL or cable
TV for the lounge, a coffee service, vending machines... and on and on and on.

If you can meet the overhead on only your personal, pre-existing clients, and
still draw a decent paycheck, it should be an interesting adventure.

--
David Morgan (MAMS)
http://www.m-a-m-s DOT com
Morgan Audio Media Service
Dallas, Texas (214) 662-9901
_______________________________________
http://www.artisan-recordingstudio.com

Thanks for the suggestions. By commercial I mean a 1st class recording
studio open to the public with 2 studios that can record bands,
choirs, voice overs whatever. Protools and 2" tape.

I have done a business plan and have went over the financials many
many times and will again.

I have come to RAP to get experienced opinions.

Yes the lease is a big issue I know and am still digging into it.

Thanks again.