Nothing lasts forever unless someone does the best they could to make it last and they have the wherewithal to do it. People don’t last but some of what they accomplished might.
Bob Dylan confronted reality and made a decision that he wanted his music to last, so he joined in a $300,000,000 offer both he and the buyer could not refuse. If nothing else, this assures the continuance of his music and the commercial exploitation that goes along with that.
$300 million is a lot of money. It is a done deal, but perhaps it could have been done for $400 million or maybe $200 million. What made the number $300 million? I do not know. I wasn’t consulted and wasn’t part of the transaction. I can tell you that the buyer likely had a plan of what they could do to generate revenue and they matched this to a return on investment they wanted to earn along with a period of time they would earn that money over. To simplify this, if the funds being paid to Dylan had an annual cost of 6% and they wanted to earn an additional 8% a year for their efforts and also to offset the risk they were taking, they would need to have net earnings of $42 million a year. That is 6% + 8% times $300 million.
For Dylan, whatever he earns on his net after-tax proceeds, likely would not make a difference in his life or lifestyle. I presume he is wealthy and doesn’t want for anything. So I do not think he did it for the money. I also think he wanted to have some control over who the buyer was which he would not have had if he left it to his executors to sell the collection. Also, I think he was in a good negotiation position since he did not sell the rights to anything he hasn’t done yet and that provides him a lot of leverage, particularly if he isn’t happy with how his work is marketed.
He is an astute businessman who carefully crafted his image and brand; and managed it in a sensible way, based on the recent sale, by permitting a taste of the value of the benefits of the commercialization of his work throughout the years.
One of the prestige watch brands tells us that we don’t own the watches but that we are custodians for the next generation. Dylan recognized that and has now assured that his work will continue on in a carefully managed manner. The time was right and he took it. In his words “or he that gets hurt will be he who has stalled.” He did not do what many business people do toward the end of their careers. He did not stall.
This blog was prepared with assistance from Louis Young, CVA, Team Leader, Automotive with whom I collaborate on many of my valuation and succession planning engagements. Lou can be reached at [email protected].
If you have any tax, business or financial issues you want to discuss please do not hesitate to contact me at [email protected].
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