Dealmaking is a fascinating phenomenon. An individual’s ability to influence a string of events in order to bring about a desired end, be it closing a private equity transaction with a German family business or negotiating a holiday deal with a Brazilian travel agent, is a combination of skill, luck, perseverance and sometimes magic. In fact, dealmaking is a lot like having sex. If you get into it with the wrong person it’s a horrible experience. If, however, the chemistry is right then it’s bloody amazing.
I see it in finance regularly and it invariably amazes me. Yet I am equally in awe when I witness it in other areas of business or, for that matter, outside of the commercial world.
Dealmaking is an art. And though art is open to interpretation, I believe that if you boil it (dealmaking) down to its essence some of those core principles can successfully be applied across a great number of activities: capital raising (investment banking); launching a new drink (beverage business); selling products online (Internet); setting up a wind farm (alternative energy); or brokering a Monet (art world).
London: near Trafalgar Square
A few weeks ago I met up with a very interesting acquaintance, Elliot Grove. As the founder of the Raindance Film Festival, he has been one of the biggest names in the independent film world.
The two of us hadn’t seen each other in a while and I was in the neighbourhood, having just stepped out of a meeting with an Indian Family Office. So I called him and we decided to grab coffee around the corner.
We caught up on life and he updated me on the recent going-ons at Raindance. It was your typical half hour catch-up. How are things? How are the loved ones? What’s new? What sucks?
As we got ready to part Elliot asked me where I was headed.
“It’s a nice day so I’ll head over to Hyde Park, sit somewhere and type up a short little post,” I said.
“What about?” Elliot asked.
“Don’t know yet. I’d like to write something on dealmaking.”
“Does it have to be about high finance,” he asked.
“Does it have to include seven zeroes to interest you?” he asked with a smile.
“Nope,” I said.
“I’ll head over to the park with you. You can listen to some Raindance stories. Then I’ll head home and leave you to digest it.”
We both hopped into a taxi.
“We’re going to Hyde Park. If you could please drop us off at one of the entrances near Knightsbridge,” I told the cab driver.
We arrived to our destination and took a few minutes to walk around and find a bench to sit on. Found one we did. And it offered a view onto One Hyde Park, one of the most expensive residential developments in the world. The flats there are owned by a motley crew of ultra-rich international businesspeople, many of whom acquired the assets using offshore vehicles to avoid tax and remain anonymous. The roster of owners reflect random business names. Funny enough, one of my clients, an English family, considered buying a flat but in the end the price per square foot was “rather extraordinary”. It is said that one of the penthouses sold for over £140 million.
“So, let’s hear it,” I said to Elliot, curious to hear about the dealmaking stories of his world.
He began to speak and I listened for nearly three quarters of an hour. By the end of it I was, once again, pleasantly surprised by the parallels I saw in his world and mine. So many practices are the same. Only the lingo is different.
An unusual start
Everywhere you look it’s the same story. To get something off the ground it takes pulling off a stunt or two (or more). Sure, you have to work hard, be persistent and put in your dues. However, to get that initial lift-off you sometimes have to do something you’d rather mention only after you’ve succeeded, if you know what I mean.
Elliot was working as a debt collector when he decided to launch Raindance, an independent film festival and filmmaker training organisation.
And he started the business while holding that job. What’s more, he did it with practically zero investment. Bootstrapped.
His objective was clear. The first Raindance festival would be held in London, where he was based.
The birth of Raindance
How did Elliot, a man with no previous experience of running a film festival, do it? By taking action. He typed up, on a traditional printer, an invitation for film submissions to the 1st Raindance Film Festival, to be held in London. Nobody had heard of Raindance before. But that was fine. It was a new organisation.
The big question was, how on earth will he attract people to an unknown festival?
Choosing the right date for the event was pivotal. What Elliot knew very well was that most of the film world attended the Cannes Film Festival in the month of May and usually hung around Europe for a little while before heading back to their respective home countries. Therefore, he chose a date very close to the French festival to benefit from existing regional traffic. “They love partying in London and won’t miss the opportunity to come down for a few days and have some fun. It’s a win-win situation,” said Elliot.
At some point, he had to spend a little money on marketing. The budget came to £150. Not a staggering sum. Use of proceeds: to send faxes to producers, agents, filmmakers and various film professionals around the world inviting them to come to Raindance. Remember, e-mail wasn’t the norm yet in those days.
So invitations were faxed.
Soon after, and to Elliot’s surprise, people confirmed they would attend. Especially filmmakers, desperate to show off their work, and buyers, hoping to get their hands on the next bestselling piece of art. “It worked,” he said. “I was ecstatic. But then I was like, shit, I need to organise the damn event now. It’s real.”
Naturally, he needed a venue to screen movies. Without any guidance, he went where it made sense to go: different cinemas around London. He knocked on doors and asked to speak to the managers. Eventually, Elliot found one location near Piccadilly Circus. It was central, popular and everybody knew Piccadilly Circus. “It was the perfect location, but you had to pay in order to book the cinema,” he said. “It took me a few rounds of negotiations but I managed to convince the owner to let me pay for the hire of the theatre right after the festival. That was a good outcome. But it meant I had a lot of pressure to deliver even before the festival took place.”
In the end, Elliot did it and the first Raindance film festival worked. As they say in Hollywood, the rest is history.
[Note: everything that went into making the first festival Elliot did alone, with no experience and almost no money at all. And there were plenty of risks involved, including not being able to pay for the venue hire after the festival. In the end he managed to barely break even. But if you put a price tag on the experience he gained then he had done very well. Priceless.]
“The money is on its way”
Years later, Elliot decided to launch an MA programme in Filmmaking. Up until then, they’d trained thousands of new and experienced filmmakers, such as Guy Ritchie and Christopher Nolan. “I felt it was now time to establish a proper post-graduate degree at Raindance. A Masters course.”
In the UK, to offer a such a programme you need accreditation. The requirements were straightforward. Raindance could become accredited via a local university. And Elliot found one.
“But there was one little, annoying factor. We were required to make a payment, which I wasn’t keen on doing until spots were sold to new students,” he said. “But I needed accreditation to get students in. It was a chicken and egg situation. So I told the university that the cheque is in the mail. I got accreditation and delayed paying for it long enough to fill up all the spots and then I finally paid. It was stressful and they kept calling and asking for the money but I held them off just long enough.”
Reminds me of dealmakers who sell projects to people way before those things even exist and then go about creating them after they’ve secured money. It’s common in real estate. For example, a developer may raise money before the first brick is even set.
Batman’s creative force showed dealmaking potential early on
“I met him when he was practically a child,” said Elliot, referring to the director Christopher Nolan (Memento, Batman Begins, The Dark Knight, The Dark Knight Rises, Inception and more). “Christopher was one of Raindance’s early students.”
Apparently, one of the famous director’s first films was shot on weekends over the course of an entire year. Imagine how difficult it must have been to ensure that characters maintain consistency (hair, weight, etc.). “For that film, Christopher needed equipment which he didn’t have. So he found some somewhere, and I won’t say where, and quietly snuck it out to shoot on the weekends. But he needed a place to store everything at night. So he asked me if he could drop them off at Raindance on weekend nights. That way he’d shoot his film and then he’d return them to the rightful owners before everyone came into work on Monday.”
Breaking the rules.
“I liked his style and he was daring,” said Elliot. “So I let him leave the equipment in my office.”
Relating it to dealmaking
“If you had to sum it up, what would you say has been vital in making deals happen in film?” I asked Elliot.
“Passion. Not being deterred because of having little or no money. And relationships. In no particular order.”
I asked Elliot to elaborate and what he told me boiled down to the following.
“People come into the business all the time and an equal number leave…it’s a tough place to compete because the glamour attracts everyone…and nepotism is rampant. The only thing that helps you stay the course, deal with all the jerks and persist is passion…those who get deterred by sex, drugs and alcohol don’t last.” - Elliot.
Couldn’t agree more about high finance dealmaking and long-term success.
2) Starting with little or no money
“I tell you something very interesting…most of the successful filmmakers I’ve known started off with no money. Ambition, resourcefulness and willingness to risks outweighed cash. In that respect you can say they started with plenty of money but of a different currency.” - Elliot.
Totally agree. I personally know plenty of dealmakers who built fortunes from scratch. When you’ve got no money you have to be extremely resourceful. And – let’s not forget – you have to break rules.
“Film is a collaborative art and a business that hinges on relationships. You don’t rise on your own. You move up with other people. There are lots of talented individuals out there…the reason you work with one person rather than another is because you like them…you’ve gotten to know each other and you have history together…all the big people of the business were once young and small. Guy Ritchie and Matthew Vaughn met at a Raindance course. You think anybody had heard of them at the time?” – Elliot.
Few things are as vital to successful dealmaking as having strong relationships.
To all you future dealmakers, take the time to nurture your relationships and remember that it is built brick by brick, over time.