Deals take a long time to close (the JPG story updated)
February 27, 2009
Last year I talked to the JPG Magazine team about buying the magazine just after they announced it would be shut down. Soon there were several potential buyers and it seemed as if there was a bidding war. I dropped out of the process, but a stubborn group of investors stuck with the JPG team and it looks as though they have finally acquired the assets of the magazine. Wow, that took a long time. January 2nd the magazine ran out of money - it took almost two months to close the deal despite the fact that it was a very simple deal. If you are planning to sell your company or raise money you need to be ready for a prolonged process. In normal times deals that seem simple can take months. In today’s current climate simple deals get take more than six months. I will be interested to learn more about the JPG deal and the new investors - hopefully Jason Kincaid will have the scoop soon.
Update: Owen Thomas has the scoop on the JPG Magazine deal in a post titled, “CEO’s $500,000 Salary Burns Startup Into Fire Sale“. He explained, “The buyers include Adorama Camera, a New York-based photo chain owned by Hasidic Jews, and a group of Las Vegas investors — all represented by Brandon Calder, a Montana-based venture capitalist.”
The more interesting part of his post was the salary information he uncovered. According to company financials he posted, Mitch Fox was paying himself $500,000 a year as well as hiring expensive salespeople, launching unrelated titles including a travel and fashion magazine. 2008 ended with a bang with more than $3.6 million in losses. Ouch.
Finally, Owen was critical of Mitch’s handling of the sale. I couldn’t agree more - especially since I wrote about the ‘mishandling’ of the sale back in January in a post titled, “JPG Magazine, Hubris & Fear“. Owen did some old fashion reporting (something I am unlikely to ever do) and learned that SmugMug felt the same way I did - Mitch Fox had thrown in the towel and SugMug came to the rescue with a fair deal. Mitch took the SmugMug deal (and perhaps mine) and began shopping them to other potential buyers. SmugMug dropped out when they learned how Mitch was handling the sale. At the end of the day JPG’s shareholders ended up with a FAR worse deal than they could have had with SmugMug. Time will tell if users ended up with a good/bad deal.
