Ampeg acquired by VCs

[N. Kentucky Bass]

For better or worst, Ampeg, Mackie, Crate, Martin Audio and other brands owned by LOUD TECHNOLOGIES have been sold to Transom Capital Group, a private equity "venture capital" firm based in Los Angeles.

Loud Technologies Acquired By Transom Capital - Bobby Owsinski's Music Production Blog

Audio Equipment for Recording Studios, Churches, Concerts

Home - Transom Capital Group

 

[Bass4LifeRS]

Why? Hope Ampeg survives.

 

[sleepyEDB]

Why?

Transom is providing much needed capital for growth...Loud Technologies had a much smaller footprint than usual at recent trade shows, with fewer new products and less of an advertising presence than in the past. That usually indicates that the company is strapped for cash, but after cutting a deal with Transom, expect to see all of those indicators improve.

Hope Ampeg survives.

The new company will be called LOUD Audio, LLC, and will continue to be led by the current executive team of Loud Technologies.

Doesn't seem like Ampeg is in any immediate danger, though if they start underperforming that could be another issue since there's now another group above the leadership of LOUD Audio to whom they must answer.


sleepy

 

[12BitSlab]

BTW, Transom acquired American Driveline Systems in January of this year and sold it earlier this month. They are not a "sit and hold" kind of VC firm. Their job is to "make it pretty" and sell it.

 

[JimmyM]

Hope I still retain my endorsement deal

At any rate, I don't know much about the situation beyond what's been reported so I'll leave the speculating to those of you with the crystal balls. Nobody at corporate discusses their decisions with me. But since Ampeg continues to be very popular with bass players, I wouldn't worry too much about its future.

 

[High Camp]

Hope I still retain my endorsement deal

...But since Ampeg continues to be very popular with bass players, I wouldn't worry too much about its future.

I just hope the crew who actually know what they're doing can keep on going.
(and not the usual reorganization where "we are going to perform better with less people")

 

[JimmyM]

I just hope the crew who actually know what they're doing can keep on going.
(and not the usual reorganization where "we are going to perform better with less people")

I don't want to see anyone lose their jobs, either. Unfortunately, that's life in the food chain. Nothing permanent but death, taxes, cockroaches, and Keith Richards.

 

[Arthur U. Poon]

BTW, Transom acquired American Driveline Systems in January of this year and sold it earlier this month. They are not a "sit and hold" kind of VC firm. Their job is to "make it pretty" and sell it.

I'm thinking the same thing.

I used to work for a regional supermarket chain as a Warehouseman. The Company was family owned and operated until the mid to late 90's when they sold out to a Venture Capitalist Company. All of the Upper, Corporate, Store, and Warehouse management stayed pretty much intact, - even after the VCC sold the chain off to a major conglomerate. As a matter of fact, even after the conglomerate took over, management remained the same.

I'm thinking Loud/Ampeg is pretty safe.

 

[Arthur U. Poon]

I just hope the crew who actually know what they're doing can keep on going.
(and not the usual reorganization where "we are going to perform better with less people")

No kidding. I hope not as well. You've got to love those board room bean counters.


I don't know the nuts and bolts of their manufacturing, if it's largely automated, I don't see a whole lot of jobs being phased out.

Although the powers that be at the corporate level oftentimes look for ways to streamline, aka "Get Leaner and Meaner", or "Do More With Less".

Let's hope the folks in the trenches aren't affected.

 

[blubass]

Who knows really though, they may have a few passionate bassist's there who bolster and grow the company further.

People assume or speculate the worst with no facts, too often.

 

[12BitSlab]

I'm thinking the same thing.

I used to work for a regional supermarket chain as a Warehouseman. The Company was family owned and operated until the mid to late 90's when they sold out to a Venture Capitalist Company. All of the Upper, Corporate, Store, and Warehouse management stayed pretty much intact, - even after the VCC sold the chain off to a major conglomerate. As a matter of fact, even after the conglomerate took over, management remained the same.

I'm thinking Loud/Ampeg is pretty safe.

At this point, I agree with you. I just wanted to point out that Transom is not the kind of VC firm that invests money, waits for 4 years, and then sells it off. Given their history of short turnarounds, I am assuming that most of the employees will be OK.

 

[Yahboy]

Maybe VC will sold to China company after 4 years....... or earlier. Who knows ？

 

[Coolhandjjl]

Whenever a company buys another in an industry with a downward trendline, it has to come up with a way to pay for the cost of the financing. That pretty much always involves the shuttering and selling off of something.

Even in an industry with a positive outlook, cost cutting measures are put in place to pay for the financing.

But one thing is certain, things will change and it won’t be business as usual for any of the acquired brands.

 

[12BitSlab]

Whenever a company buys another in an industry with a downward trendline, it has to come up with a way to pay for the cost of the financing. That pretty much always involves the shuttering and selling off of something.

Even in an industry with a positive outlook, cost cutting measures are put in place to pay for the financing.

But one thing is certain, things will change and it won’t be business as usual for any of the acquired brands.

Cost cutting can be invisible to employees and customers.

This example may not apply to Ampeg -- I am NOT familiar with their finances.

A company may have outstanding loans that could be either senior debt or subordinated debt that carries a high interest rate and the negative cash flow from servicing the loan may be hurting the company. A VC firm is in a much better position to renegotiate with the lender to ease the terms of the loan and force other covenant changes. Thus, the firm becomes "prettier" to a buyer. The VC firm then sells it off and pockets profit. No employees were affected and no customers were affected either. The only ones who are taking it on the chin are the lenders, but they may see that as a win because they get the principle back along with some interest. That is a “win” when compared to writing the loan off or dealing with a bankruptcy court.

 

[J.D. Detroit]

I'm going to have to use this and tell the wife time for me to grab a V4B while I can.

 

[JimmyM]

Who knows really though, they may have a few passionate bassist's there who bolster and grow the company further.

People assume or speculate the worst with no facts, too often.

That's the internet for you.

I found out today that the head of the VC they've teamed up with used to run Blue Microphones. That's a business you don't get into solely as a money-making venture, although it apparently did quite well for him. But it could have gone either way. The other guys running it look like musicians, too

 

[Coolhandjjl]

Cost cutting can be invisible to employees and customers.

This example may not apply to Ampeg -- I am NOT familiar with their finances.

A company may have outstanding loans that could be either senior debt or subordinated debt that carries a high interest rate and the negative cash flow from servicing the loan may be hurting the company. A VC firm is in a much better position to renegotiate with the lender to ease the terms of the loan and force other covenant changes. Thus, the firm becomes "prettier" to a buyer. The VC firm then sells it off and pockets profit. No employees were affected and no customers were affected either. The only ones who are taking it on the chin are the lenders, but they may see that as a win because they get the principle back along with some interest. That is a “win” when compared to writing the loan off or dealing with a bankruptcy court.

However, when an Equity Firm steps in, they will almost always insist on a substantial management fee that comes out of current cash flow. That lowers their risk that a suitable buyer can be later found to flip it to at a profit. IOW, the Equity Firm gets in on the backside by contract, and the potential for more on the front side when they sell it.

 

[J.D. Detroit]

The company is alive. Good enough for me.
Unless there is an official adios announcement, or $2 quality @ $1500 map - Ampeg is still Ampeg as it sits.

Optimism with the possibility of improved and/or new toys.

 

[JimmyM]

That's the internet for you.

I found out today that the head of the VC they've teamed up with used to run Blue Microphones. That's a business you don't get into solely as a money-making venture, although it apparently did quite well for him. But it could have gone either way. The other guys running it look like musicians, too

Apparently this was a bit misunderstood. Transom Capital did own Blue Mics for a few years, but they bought it from the founders.

 

[Snaxster]

I'll leave the speculating to those of you with the crystal balls.

Wow! Who knew this was such a wild crowd? Talented, of course. But crystal... ("Klink, klink.")