Incentives matter.  A post-closing performance based payout on an out of home acquisition provides incentive for a seller to artificially boost revenues.  That’s the lesson of the Verde Outdoor Media (“Verde”)  versus JR Media, John “Jed” Renfroe, Christa Hurley (Jed Renfroe’s sister) and Marcus Ben Jones (collectively “Sellers”).  Here’s the background.

• In 2021 Verde entered into an agreement to purchase 85% of the membership interests in Renfroe Outdoor from Jed Renfroe, Christa Hurley and JR Media. The purchase price was based on 10X  actual billboard cashflow from existing billboard sites, 10X estimated cashflow from permitted billboards under development and 8X estimated cashflow from unpermitted billboards under development.
• At the end of the first 12 months there would be a true-up to confirm if the sum of actual billboard cashflow and estimated billboard cashflow was over or under billboard cashflow at closing. The purchase price would be adjusted up or down based on whether the cashflow at the end of 12 months was above or below the estimated cashflow at closing by 8-10 times the difference in cashflow.
• On February 11, 2026. Verde Outdoor sued the sellers on multiple counts which total more than $50 million for fraud, racketeering, conspiracy, breach of agreement and breach of duties. The lawsuit alleges that the Sellers advanced money through direct and indirect affiliates (e.g. an affiliated media agency or affiliated donor advised funds) to certain charities which bought advertising on the billboards subject to true up at above market rates.  The Sellers called this “The Great Check Exchange Program”.  The litigation cites an actual email exchange between Jed Renfroe and an employee explaining how the check exchange would work.

Employee: …Language on contract for United Way saying contributor to pay okay or how do you want to handle that?  Bob getting contract filled out and going to UW meeting today for signature.

Renfroe: We need the 501-c-3 number and address of where to send checks.

Employee: So we are giving them the money to pay us correct?

Renfroe: Yes

 Employee: Can we put verbiage on the contract like they will not have to pay or an addendum that says they won’t have to pay the bill/

  Renfroe: No they need to pay.  We are going to send donate them the money to pay the monthly invoice.

              And here’s another email in which Christa Hurley talks about the impact of the check exchange:

 Bottomline is there is great value in funding the board sales to save cash on the true up.  It is exponential after the goal BCF is made.

Billboard Insider’s take:  We hear that efforts at mediation have failed and the case will go to trial.  Could be very expensive for Renfroe if he loses because every dollar of damages awarded by the court will be tripled in this RICO case.  There’s a lesson here for out of home acquisitions.  If every dollar of post closing acquisition cashflow puts $8-10 in the seller’s pocket, you’d better look closely at the cashflow.  Same thing applies to cashflow at closing which is why you need to audit closing ad contracts and ad payments carefully to make sure they are arms length and paying prior to closing an acquisition.

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