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Club Penguin is a great success story for small business within the Okanagan and across Canada. The Kelowna-based web venture was purchased by Disney for $350-million, plus an additional amount up to $350-million, contingent upon hitting earnings targeted. Of this amount, approximately 10% will go towards Club Penguin's charitable foundation which focuses on helping less fortunate children around the world.

The seeds of the idea for Club Penguin were planted when Lane Merrifield, Dave Krysko and Lance Priebe got together in 2003. Prior to that, Lance Priebe had been developing web-based games in his spare time while working for Dave Krysko at New Horizon Productions, a corporate video and multi-media production company. When New Horizon Productions hired Lane Merrifield as a sales representative these three innovators saw a unique business opportunity. Merrifield, Krysko and Priebe combined their business, creative and technical skills to come up with the idea for a kid-friendly social networking site that they would let their own children use without worry.

Although Merrifield, Krysko and Priebe have benefited financially from the sale of Club Penguin, they are still the guys next door and have no intention of retiring. Club Penguin is more than a business venture to these partners; it is their passion and they intend to stick around to watch Club Penguin mature and grow. Club Penguin operations will remain in Kelowna and the three partners will continue on in management positions.

When Len Vandenberg and Ken Ficocelli, partners at BDO's Kelowna office, first met the guys from Club Penguin, they were impressed with their down-to-earth personalities. Ficocelli would see Lance riding his bike to work every day, rain or shine, and although Lance has now purchased his first new car, he still rides his bike to work most days. Dave has remained true to his philanthropist nature and is contributing more time and money to his various charitable ventures, including establishing and operating a home for local women recovering from drug and alcohol addictions. Lane has held onto the family values he grew up with and works hard to put his family in first place. Vandenberg witnessed this firsthand when, at the height of hectic negotiations leading up to the sale of the company, he ran into Lane taking the time to have lunch with his wife Maegan and their children in the local cafe.

Club Penguin was approached by other investors and companies but Merrifield, Krysko and Priebe wanted to find a company that would uphold their family values and concern for children. The three partners were willing to walk away from other similar offers because they placed the utmost importance on finding a company that would fit with their ethos. They found the perfect fit with the Walt Disney Company, which will now allow Club Penguin to reach more children across the world.

The social networking website, mostly used by pre-teens, was launched in late 2005, and now boasts over 12 million users in the United States, United Kingdom and Canada, with more than 700,000 paid subscribers. Participants create a penguin character that interacts with other users, participates in group activities and faces many of the responsibilities of the real world, such as working for virtual currency which is then used to create and furnish a penguin home.

The website will be renamed Disney's Club Penguin but the URL will remain unchanged at http://www.clubpenguin.com/.

For Disney's announcement visit: http://corporate.disney.go.com/news/corporate/2007/2007_0801_clubpenguin.html

Many thanks to the partners and staff at BDO across Canada who worked on this deal:
Len Vandenberg (Partner, Kelowna Office), Ken Ficocelli (Partner, Kelowna Office), Darryl Loewen (Senior Manager, Kelowna Office) and all other staff for their work in overseeing coordination of the deal, as well as the tax planning.
Michael Madsen (Partner, Vancouver Office) & Lynn Watt (Senior Manager, Vancouver Office) for their work in preparing the projected financial statements.
Mario Piroddi (Manager, Vancouver Office) & Travis Leppky (Senior Manager, National Office) for their work on the IT Audit.


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