I will partially disagree with you. The CrossFit name is a huge draw for membership. I guarantee you that if you opened two gyms with the same trainer and one was CrossFit the CrossFit one would grow significantly faster. CrossFit affiliates have a 2% failure rate. That is absolutely incredible and it is not simply due to the trainers.
Yeah I mean, let me try and stick with the McDonald's analogy. I'm east coast, not sure if everyone is familiar with, I don't know, how about Five Guys Burgers and Fries? Five Guys as far as a burger goes kills a McDonald's burger. But that McDonald's brand is huge!
CrossFit could drop the title, affiliates de-affiliate and start up, TrueFit or whatever. That rebranding effort however would be a huge effort and a major drop off at first. Convince affiliates to take the risk, negotiations with Reebok and ESPN have to take place. A gridlock is just as bad. Imagine you own a company, which is now hugely successful and someone's simple disagreement keeps you from any further changes or innovations when your instinct and vision has obviously served the brand well up to this point. I mean, who actually starts by giving away the product for free?
Sounds like a nightmare scenario to me.
Chris, I have a pretty good finance background, and I am a transactional attorney. I also worked for the world's top consulting firm. I have a pretty good understanding of private equity and M&A..
Anyway, the issue is not whether they want to do anything. It is that they can't. A 50% owner can force gridlock, but that is about it. They cannot implement changes. If Anthos wants to do something and Greg does not want to allow it, then it cannot be implemented. This also works the other way around, but Greg is the current CEO and gridlock would be disastrous for Anthos.
And yeah, of course the divorce court would need to approve anything. But eventually, Lauren will sell her shares, and I really doubt the judge will let Greg decide who she can/cannot sell to.
Alex - you run a 4:40ish mile with something close to those lifts? Holy shit. You must get tons of girls. Are you super tan, too?
With that said, I am no expert on that front, so I won't argue that point further.
Sorry Chris, I am not trying to call you out. I just thought Justin was correct with his post. I am roomies with an attorney who talks about the matter and says the same. I know you said you wont argue the point and neither will I. Just wondering why you would bet money on it? Just because the all mighty dollar controls all? Like you said, I am not an expert and do not want to start an argument. I am just hearing a lot of conflicting sides on the matter and like others here would like to know why.
I wonder how much leverage Reebok has in this?
1) Anthos would NOT buy a 50% share unless they thought they could change the business model. To believe anything else is naive in my opinion.
2) There always seem to be ways. Perhaps they could find a legal way to oust coach Glassman etc.?
Anyone see this:
In any event, I'm not sure why bringing in some people with business savvy will be so bad for crossfit. Look at how much more exposure the sport has since the Reebok deal.
I'm not concerned at all. He needs a lot of cash to buyout his ex. Investors are where you go for that. If Greg makes the arrangements he controls the terms of said agreement. He is not a stupid man. He will protect his interests when he does so.
1) You don't know anything about the plane deal. The deal did not go through for reasons having nothing to do with credit/profitability.
2) He would be in control because as the borrower you always have the power of choice. You can accept terms offered you or not. CrossFit is quite profitable, I am quite sure there are many lenders that would be happy to work with them.
Anyway, the point about the plane was more the fact that HQ needed a loan to purchase a $700k plane. And now they are going to take on a $17 million loan that will require $1.2 million a year (almost two planes) just in interest payments?
People need to actually take a look at these so-called banks Greg is seeking money from.
THL Credit (http://www.thlcredit.com/junior-cred...junior-debt/):
They are making an investment by taking a security interest in Crossfit.Quote:
Originally Posted by THL Credit
And take a look at this.
They are NOT passive investors.Quote:
Originally Posted by THL Credit
Level Equity, the other "bank" (http://www.levelequity.com/results.php)
Originally Posted by Level Equity
They have invested in 39 companies, 6 have gone public and 24 have been acquired. Do these sound like the actions of a "bank" that gives out "mortgages"? Or does it look like a typical, profit-motivated, investment firm?
Minnie, it sounds like you do not have a great grasp on corporate finance. CrossFit (Greg) will probably secure a mix of equity and various forms of debt. CrossFit will make sure that it does not sell enough equity to allow 50% of the company to be owned by a third party. Therefore, Greg will retain control of CrossFit. The excess funding will come from various forms of debt. The excess (the debt) will be significantly less than the $17 million that Glassman is apparently seeking. He will probably grant a security interest in CrossFit so that rates stay low. It will also help to have mezzanine and similar classes of debt in order to keep the rates down. There may also be some kind of baloon payment that Greg sets up.
I think it is hard to determine CrossFit's cash flow...
(Another alternative would be to just sell non-voting equity, like preferred stock ... Glassman could have the minority of the outstanding equity, but still have full control)