Business for Sale: New York City Theatrical-Production Company
The Business Set amid a spectacular fantasy world of plummeting chandeliers and giant ascending tires, this company provides the technological expertise for large theatrical productions -- including set construction, special effects, and production management. The company earns about 50% of its sales from the Great White Way (a small job is worth $300,000); the rest come from theme-park attractions and from staging events at trade shows. The owners, who expect to stay on as technicians after the sale, are selling control of the company mostly to obtain funds for expansion.
|Recast earnings before depreciation, interest, taxes, and amortization||$2,900||$2,900||$6,200|
Price $30 million
Outlook This company's recent success reflects the trend on Broadway toward big-budget extravaganzas. To get people into theaters, producers are offering anything from warbling phantoms to trains on roller skates, surrounding them all with enough lights, bells, and whistles to make you forget that cats can't dance. There are fewer new shows now (30 in an average season, down by half since 1970), but they're a lot splashier. Shows can now cost as much as $11 million to produce, double what they cost in the early 1980s. But Broadway, while lucrative, is hardly reliable -- thus the push into theme-park markets, especially in the new "family-friendly" Las Vegas. And despite Euro-Disney's recent woes, foreign markets are expected to expand aggressively. As for those big glitzy production numbers at trade shows: well, they were bigger in the '80s.
Price Rationale The company's value is heavily dependent on the contacts and client relationships of the owners. Observers agree that since the current proprietors will stay to help run the company, and since there's no guarantee that its 1993 earnings can be improved upon, the most likely scenario is an earn-out: establishing a base price with additional payments tied to the company's future performance. With a properly structured earn-out agreement, experts say, the price could approach the high twenties or low thirties.
Pros The owners come with the sale, as do their entrenched industry contacts. And then there's Broadway. "Question: How do you get to Broadway? Answer: Practice." Well, here's your chance to prove that old gag wrong.
Cons Ah, Broadway. What other boulevard has inspired so many dreams and broken so many hearts? Face it: this is a construction company; plus, the owners will no doubt have their own ideas about how to run the show.
-- Christopher Caggiano* * *
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Geneva Capital Markets at 212-759-9400.