Jamie: Rawdon, hello—good to see you. You still off the coffee?
Rawdon: Hi, Jamie. Yes. A glass of water would be great, though.
Jamie: the same lines? Help yourself. So, how’s the dotcom world treating you?
Rawdon: It’s been going very well, thanks. Very well indeed. But the competition is pretty strong, and we’re always looking for new ways of getting people to our website.
Jamie: Sure. Hence the interest in You.fm. I took a look at the site the other day, I’m hooked! Thanks for emailing me the details. To be honest, I’d never heard of it before.
Rawdon: Really? It’s one of the major dotcom successes of the past few years.
Jamie: And I can see why, it’s fantastic. Your own radio station that only plays the tunes you like—what a brilliant idea!
Rawdon: Yes. A simple idea—but brilliant.
Jamie: And you think that owning the site will help generate traffic?
Rawdon: Yes. You’ve seen how it works. It’s free to register, you give details of the kind of music you like and the site then plays random tracks from these bands.
Jamie: Only those bands?
Rawdon: No. It also plays music from other bands that people with your tastes are listening to. We’re adding a feature that will link each track to our online store. So let’s say you’re listening to a track by Duffy’s Comeback….
Rawdon: OK, let’s say you’re listening to a track by the Beatles. You like the track and you’d like to have it on your mp3 player to listen to whenever you want.
Jamie: Right, with you so far.
Rawdon: You just click on it and you’ll be taken straight to the store. We’ll have a oneclick option for registered users, so buying tracks will be really easy. Good for the user. And very good for us.
Jamie: OK, and what are your plans as far as the acquisition is concerned? How will it be structured?
Rawdon: What do you mean?
Jamie: I mean are you looking to purchase shares or the assets of the company? You can make an offer to purchase all of the shares, that way you’d gain complete control. Alternatively you can simply make an offer for those assets you’re interested in.
Rawdon: Well, that’s really what I’m here to discuss. We don’t need to take over the company, it’s only really the website we want. We can give them a very good price for it.
Jamie: So you'd be looking at an assets sale since you don't want the whole company. I wonder if your competitors are thinking along the same lines?
Rawdon: We’ve considered this, and we want to make a very attractive non-negotiable offer as soon as possible. This will probably involve keeping the guys behind the website on as directors.
Jamie: Smart move. You want to avoid an auction sale if possible, you don’t want to get involved in a bidding war. I’d suggest we put together an offer soon before others start thinking the same thing. I may not have heard of You.fm before, but I guess your competitors have.
Rawdon: So you think an assets sale is what we should go for?
Jamie: Well there is another option, what we call a hive down.
Rawdon: A hive down?
Jamie: Yes. A hive down is a compromise between an assets sale and a share sale. The target, in this case You.fm, sets up a new company as a wholly-owned subsidiary into which it transfers those assets you want to buy. You then acquire the shares in the new company. By going for a hive down, you take control of a company which has been created to suit your exact needs.
Rawdon: Hmmm. Maybe you could take me through the pros and cons of each, I need to understand both the legal and the tax implications.
Jamie: Sure. I can certainly advise you on the legal aspects, as for your tax you may need…..(FADE)