What is a "Roll-Up" and why does it matter to you?

If you're active in the film, documentary, or film communities in New York then you've no doubt heard the rumors about a Roll-Up that's making it's way door to door from one mid sized company to another.

The pitch is seductive, and simple. You've got all this value in your company... Wouldn't you rather be focused on creative work and filmmaking, and be part of an enterprise that will do the sales, business affairs, and financial back office work for you?

No obligation. No risk. Seems too good to be true?

Here's some free advice. Take it for what it's worth.

1. Roll-Ups are about using your reputation, equity, clients, and library to raise money. Make sure anyone who approaches you has a real financial base. Make sure that ALL correspondence is copied to your lawyer and theirs.

This is NOT a casual transaction. It's your life, and your future.

2. Letters of credit. If someone is asking you for personal financial information - you deserve to see theirs. Who is their bank? Who is their accountant? Will they provide a letter of credit, or a 'break-up fee' if they use your reputation, brand, and financial information to shop for a deal and then don't include you in the transaction?

3. NDA. Non-disclosure agreement. Don't let anyone see inside your company without an NDA. And make sure it's SIGNED. Hold firm. If you can't get a legal document that protects your interests - don't proceed.

4. Google. Everyone has a history. If one of the principles seems to have non past, no work history, no former clients or employers... You're not dealing with people who's past activities can be verified. This is a warning sign.

5. Legal research. In this era of the internet, don't assume that everything you need too know about your potential partners can be found on the internet. Legal research is arcane, and often involves proprietary databases like PACER that can't be searched without a low-cost subscription. Once again - your attorney should advise you to do both a civil and criminal background check on any potential investor or acquirer of your company.

5. Creative people tend to be trusting. And asking hard questions of someone you think may be a lifelong business partner can be uncomfortable. But business people understand due diligence. They shouldn't want things to be done in a less than forthright manner. If you're uncomfortable asking tough questions - make sure your accountant and lawyer do it for you. Any transaction that can't pass the smell-test with your accountant and lawyer is one you can afford walk away from.

6. If it seems to good to be true - it is. This is a hard business. And the people who've built businesses that are attractive to investors tend to be honest, passionate, trusting, ethical individuals. But those qualities are attractive to less scrupulous characters as well.

Knowledge is power.