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Topic: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garritan?

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  1. #1

    "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garritan?

    Saw this recently in the V.I control forum.

    http://www.makemusic.com/Pressroom/Default.aspx?pid=555

    How will this affect Garritan, I wonder?

    SysExJohn.

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  3. #3
    Senior Member Silh's Avatar
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    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    Looks like LaunchEquity is apparently MakeMusic's largest shareholder; looks like they want to buy the whole thing?
    -- Matt Wong

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    Senior Member rpearl's Avatar
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    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    I'm a Sibelius user, and when Sibelius was acquired by Avid, many of us were apprehensive. Recent events have borne out that fear - they are closing the London office, the heart and soul of the operation. I sincerely hope that buyers of Finale have better management sense than Avid. And, that they realize what a notation program really is, what it does, and who its buyers/users are. Good luck guys - hope you don't join down the rat hole...
    Ron Pearl

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  5. #5

    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    Monday’s biggest gaining and declining stocks


    MakeMusic Inc. (US:MMUS) rose 13% after LaunchEquity Partners made a proposal to acquire the remaining 72.3% stake in the company it does not already own for $13.5 million. Under the proposal, LaunchEquity would acquire all of MakeMusic’s operating assets, excluding cash, and assume its liabilities. Then MakeMusic, a provider of music technology and software, would adopt a plan of liquidation and distribute the available cash to its existing shareholder.

  6. #6
    Senior Member caher's Avatar
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    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    Folks,
    This is a most interesting development. Here is the SEC filing:

    http://www.sec.gov/Archives/edgar/da...mak_071512.htm

    It is very interesting reading indeed. It appears to me the Launch Equity folks, who own 28% of the company, are not particularly happy with the way things are being run, with 4 CEOs in 4 years.

    They also indicate that the notation products (Finale, PrintMusic, etc) code base is at end of life and needs significant investment. Some of us who use Finale and understand software product life cycles have long suspected that this may be the case. Launch Equity stated that they plan to invest $10M in this. That is very significant for company with a market cap of ~$20M.

    A few years ago, I looked into making a fairly substantial (for me, anyway ) investment in MM. I wanted to invest in a company doing what I consider to be important work in the world of serious music. Looking into it closely, I chose not to for the reasons that L-E has outlined, in addition to the fact that it seemed to me that a very small number of share traded caused pretty wide swings in the valuation, making it easy for someone to manipulate the stock price. I was also concerned about the cash flow in the company. They were barely in the black then and last year slipped into the red.

    On the other hand, if I had bought then and this deal goes through, I would have come out substantially ahead, with an annual rate of return of about 15% for about three years. Oh well.

    What is not clear at this point is whether L-E considers the Garritan product line a strategic asset or will put it on the block for sale.

    Chris

  7. #7

    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    It's difficult to know how to interpret a move like this (and doesn't matter whether we know how to interpret it or not) but you can bet LaunchEquity isn't doing this because of a love of music or an interest in notation software, sound libraries, etc. I'm sure MakeMusic could use the $10M but it isn't necessarily result in better products (as judged by the current user base) ... not if a different customer base would earn LaunchEquity a better return on their investment. I fear MakeMoney is more important than MakeMusic to LaunchEquity.

    Pat

  8. #8

    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    It would seem clear from Avid's effective 'dumping' of Sibelius and the downturn of sales of Finale, as well as stagnation of the SmartMusic product line that either this market has reached saturation or the current worldwide economic climate has had/is having a major impact on sales/subscriptions.

    Whether the same is true of the virtual instrument market I don't know. i.e. was Garritan 'acquired' because it was still making money, to boost the ailing Finale product?

    We should all remind ourselves that loyalty to customers is only feasible when the company that makes the product is making money. i.e. no sales = no salaries.

    However, the fact that the CEO of Avid has awarded himself, no doubt driven by a sycophantic 'remuneration committee', a pay award of 300 percent, I'm not sure over how short a period, followed by the closure of the Sibelius London office, seems excessively cynical to me.

    Reminds me of the banking world.

    And it's only my 2d. worth.
    SysExJohn.

  9. #9

    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    Quote Originally Posted by SysExJohn View Post
    ... We should all remind ourselves that loyalty to customers is only feasible when the company that makes the product is making money. i.e. no sales = no salaries.
    But stockholders should be reminded that loyalty of customers and gaining new customers is feasible only when the company makes a product worth buying. Hopefully LaunchEquity is serious about its added investment in MakeMusic. Avid seems to have missed that point with Sibelius.

    Pat

  10. #10
    Senior Member caher's Avatar
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    Re: "MakeMusic Confirms Receipt of Proposal from LaunchEquity Partners, LLC" - Garrit

    A very quick scan of MM's latest annual report shows that the excecutive compensation levels are no where near the levels of the Avid CEO. Lookes like a CEO salary of ~$300K with a small bonus as these things go and worthless stock options.

    Most interesting was the combined purchase price for Garritan & Recordare: $2.5M. I suspect someing on the order of a 80/20 split in Garritans favor.

    It is clear that MM is pretty frugal in the way it runs the company but it is subject to conditions that are far outside it's control. "Interesting" times ahead.

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