hollywood billionaire

Chapter 23 UTA
United Artists Brokerage Company was established in 1991, just like Parkway Capital, in a time of change.

However, Parkway Capital chose Irvine, which is still in its infancy, while United Artists Brokerage Co., Ltd. settled in the star-studded Beverly Hills.

In January 1991, Jim Berkus, Marty Bauer and Peter Benedek, three well-known acting agents in Hollywood, reached a consensus to transfer their two companies, Leading Artist Agency and Bauer Benedek Dirk Brokers to merge.The new company has a simple and straightforward name, United Artists Agency, United Talent Agency.

The three are originally a leader with both ability and connections. Jim Berkus is the acting agent of the Coen Brothers, Barbra Streisand and Owen Wilson. The behind-the-scenes driving force of countless classic dramas such as "Order and Order", while Marty Ball has been deeply involved in the preparation of popular movies such as "Die Hard", "Fantasy City", and "Wire of Fire", and is the queen of Maria- Kylie's most trusted event manager.

With the three forces in one place, the initial development of UTA can be described as rapid progress. In 1996, the United Artists Agency was named by the "Hollywood Reporter" as one of the four major agencies in Hollywood.In the 21st century, UTA's achievements in the field of film and television are even more brilliant. They have the most powerful comedy artist resources in Hollywood, including Jim Carrey, Dave Chappelle, Ben Stiller, and a large number of phenomenal Comedy writers.Of course, comprehensive superstars like Angelina Jolie and Johnny Depp are also one of the key factors why film and television companies favor UTA.

In 2011, UTA moved to a new headquarters of 25.2 square feet on Civic Center Boulevard, UTA Plaza, and completed a series of mergers and acquisitions planned for the new decade, including the purchase of NS Bernstock, a company specializing in representing TV news anchors. A performing arts agency whose clients include Anderson Cooper, Bill O'Reilly and Meghan Kelly. In May 2014, UTA announced the establishment of Keyword Publishing House to enter the book publishing market. In August 5, UTA further acquired TAG, the world's largest independent music agency, and included well-known bands such as Muse, Paramore and The Black Keys.

Now, UTA has grown from a performing arts agency with Hollywood as its main client to an industry giant spanning film and television, literature, music, news, brand management, games, e-sports, sports and other fields.1400 employees worldwide, with an annual gross profit of $3.25 million and a net profit of $5000 million.Considering that performing arts brokerage companies usually only get 10% of client income, the total output value of the industry directly or indirectly leveraged by UTA is at least 50 billion US dollars.

"Mr. Le Pen, this is a company in a very healthy financial position and a company that has been consistently profitable for more than a decade."

Han Yi put down the coffee cup in his hand and said softly.

"But it's not a company without worries."

"On March 2015, 3, five CAA agents collectively submitted their resignations and defected to UTA without prior notice to Chairman of the Board Richard Lovett and Managing Director Brian Ludd. Also leaving CAA are their clients, Chris Pratt, Will Ferrell, Zach Galifianakis and Melissa McCarthy."

"Within a week, the total number of agents who defected reached 11. In the history of CAA, its reputation and client list have never suffered such a huge and intensive blow."

"Some people say that such a large-scale defection of agents is because they are dissatisfied with CAA Chief Financial Officer Jeff Berry's strict restrictions on agent salaries and commissions, which was originally one of CAA's biggest attractions. Others say , led by Marty Resack, accused CAA of not using the $2.41 million raised for further development of the company like its biggest competitor WME, but using it as a high-level cash out channel."

"Do you know, Mr. Le Pen, not only the 2.41 million US dollars in financing. CAA also borrowed 6.1 million US dollars from various financial institutions, of which 3.99 million US dollars were used for 'member dividends'. Among these 'members' Most of them are managing directors on the board of directors.”

"I've heard it," Douglas Le Pen replied. "It's very interesting information. Go ahead, Mr. Han."

"CAA also fought back against these 11 brokers, claiming that they received a total of $2014 million in commissions in 3500 alone. Of course, the brokers directly denied this, saying that their money was less than one-third of this figure one."

"Regardless of the truth, CAA's prestige has been seriously weakened in this PR and personnel disaster. The whole of Hollywood also called this incident UTA's 'Midnight Raid' on CAA. The aftermath of the incident was so bad that even CAA's The major shareholder, TPG Capital, which provided them with 2.41 million US dollars and 6.1 million credit guarantees, specifically called to inquire about this matter."

"For revenge, CAA not only sued 11 defectors and UTA for violating the competition agreement, but also used almost all the remaining funds in their hands to poach UTA's agents in the same way. In the past year , musicians, news anchors, actors...any UTA client that CAA can reach, they promise a lot of money."

"Yes, Mr. Han." Kanyong-Liu is the head of the investment analysis department of Baihui Capital. He has a deep and precise control over the latest news in various industries. The exact news is that Johnny Depp has refused to renew his contract with UTA. In the past few years, he has been very dissatisfied with the movies that UTA arranged for him, and CAA has also shown enough sincerity. It is expected that the contract will end in the second half of the year. We will officially sign a contract with CAA."

"It's these things." Han Yi cast an approving look, "UTA is in a state of distress. Compared with WME and CAA, they are much weaker. In 2012, Silver Lake Capital acquired a 31% stake in WME for US$2014 million. In 51, it invested another 24 million yuan and directly held 55% of the shares. Using these two funds and high valuations, WME raised [-] billion US dollars in acquisition funds in the market, and directly ate up IMG as a whole, becoming an entertainment company. The undisputed king of the brokerage market, valued at $[-] billion."

"Softbank is going to invest in WME-IMG next." Douglas Le Pen added, "2.5 million, Mr. Sun mentioned it when we had lunch with me last month."

Hearing Douglas Le Pen's straightforward narration without showing off, Han Yi couldn't help but look at him twice more.

It turns out that this is the world of top capital.

The two heads of the group, who are located at two poles of the world and do not seem to have any intersection, meeting and gathering are as simple as neighbors living across the street inviting each other to their homes.

After taking a sip of the coffee, the bitter taste in his mouth eased the indescribable complex emotions a little, before Han Yi continued.

"Yes, looking at CAA, although the money is not that much, and the ambition is not that big, but there are at least three or four billion US dollars in cash that can be used at any time. And UTA, from its establishment to the present, has not accepted any big money. The annual net profit of 5000 million US dollars seems to be a lot, but more than half of it is divided among the senior partners as dividends. The funds that can really be used for mergers and acquisitions and investment can never add up to more than [-] million.”

"That's why, they even published a press release recently, offering 40% of the equity in exchange for cash investment."

"Mr. Han is right. UTA entrusted Meritor Investment Bank and is looking for investors." Facing Douglas Le Pen's questioning gaze, Kanyon Liu gave an affirmative answer.

Meritor in Canyon’s mouth is an independent investment bank located in New York and a listed company on the New York Stock Exchange. It specializes in providing various financial consulting services and helping clients achieve their strategic goals through mergers and acquisitions, asset restructuring, corporate restructuring and other financing services. .

"Meritor, I understand." Douglas Le Pen made some calculations in his heart, and then smiled.If I remember correctly, the total assets directly managed by Meritor should not exceed 800 billion U.S. dollars, and its own market value is also around 30 billion U.S. dollars. It is a slightly smaller negotiating opponent than Parkway Capital.

Of course, such independent boutique investment banks have other advantages.

"It seems that you have done enough homework, Mr. Han."

Turning his head, Douglas Le Pen's expression shows a little more appreciation for the younger generation. Keen observation of industry dynamics is one aspect, and accurate judgment of investment targets in light of the market environment is another aspect.Coupled with the US$1.4 million in cash held by Han Yi itself, Douglas Le Pen has a little more confidence in Han Yi's upcoming plan.

"UTA needs money, and we need it urgently. And we happen to have money, and the investment of Parkway Capital can also help them further increase their valuation, thereby mobilizing more funds for expansion."

Han Yi stared at the three bigwigs in the capital circle sitting across from him, and said seriously.

"My proposal is, gentlemen, let's create a joint investment fund together, with a six-to-eight-year exit cycle and a single investment target. I can put all the $3 million exited by the No. 1.4 investor fund into this fund."

"If Baihui itself is interested in this investment, you can join in person. If you feel a bit reluctant, you can also turn it into a small-scale private equity fund and recruit about two to three investors who can afford an investment amount of 5000 million US dollars. .According to my judgment, the final transaction price of 40% of the equity should not exceed 2 million US dollars."

"This separately established limited partnership is the main body of the acquisition, and the business team of Parkway Capital is the main negotiator, right?"

Douglas Le Pen is an extremely smart person, and he knows very well why Han Yi chose to establish a joint investment fund with them.To be honest, Han Yi already has 1.4 million US dollars in his hands. If there are some contacts, the remaining 6000 million US dollars can be directly made up by individual investors, and there is no need to use institutions such as Parkway Capital.

More importantly, with 1.4 million US dollars in cash in hand, coupled with the physical assets that Han Yi has already purchased, he can leverage at least double the credit, so he doesn't have to worry about funding at all.

The reason why Han Yi chose to continue to cooperate with Baihui Capital is naturally for other reasons.

For what reason?

At the age of 22, it is inconvenient to come forward for business negotiations in person.

Having no past investment history and asset management experience at all will also prompt the negotiating opponent to intentionally increase the offer, or even directly reject the investment invitation.

The most important thing is that the establishment of a new unknown rookie institution can't make the investment target get a leap in valuation.

What is valued by the investor is not just the idle funds in the investor's bank account.The latter’s rich experience in business operations and financing rounds, as well as the diversified development opportunities brought about by extensive contacts, are often much more important than the investment itself.

From this point of view, the Asian boy in front of him and the family behind him have no other financial relationship in North America.

Douglas Le Pen glanced at Han Yi with a smile and thought to himself.

Good control, good grasp.It can retain 1.4 million U.S. dollars of funds. The plan proposed by Han Yi is also a good direction to try. Even if the investment fails to a mess and UTA directly closes down, Parkway Capital will only lose tens of millions of U.S. dollars.

Tens of millions of dollars is not enough for Le Pen's annual dividends from Parkway.

"I still need to discuss it with the other two senior managing directors. However, Mr. Han, Parkway Capital has made many customized investment funds, and we will continue to move forward on this road in the future."

The words of Douglas Le Pen can be regarded as the initial confirmation of the cooperation intention.

"If we want to do this, in the next half month, we will set up a special limited partnership company in Delaware. At that time, you can hold shares in the name of an individual or a limited liability company. Ruobai If Huihui invests independently, then we will allocate shares according to the specific investment share. In the case that we introduce external investors for you, Baihui will require 1% of the management shares.”

“不管是哪种情况，我们都会申请506规则、3(c)(1)和3(c)(7)条款的解限，让您能完全拥有我们旗下所有主力基金享受的豁免权。”

The 506 rule and the other two clauses are the restrictions imposed by the US Securities and Exchange Commission on private equity funds, such as no publicity and promotion, no resale within six months after purchase, and so on.

However, as a joint investment fund that is expected to have at most two or three investors, and each investor will inject at least US$1000 million, the limited partnership company co-founded by Han Yi and Parkway Capital will be able to bypass the 1940 Most of the SEC registration restrictions under the Investment Company Act make the registration, review and operation of companies more simple and straightforward.

"It was a pleasure talking to you, Mr. Han."

Douglas Le Pen stood up and extended his hand to Han Yi.

"Give us a few days, and if there is no accident, the acquisition of UTA will be promoted soon."

"thank you."

Feeling the strength from the edge of his palm, Han Yi smiled and nodded to the three senior partners of Parkway Capital.

"It is my sincere hope that this begins a business adventure that we both will never forget."

(End of this chapter)