Fine Sounds Group Bought Out By Management

[miziq]

Interesting!

Mauro Grange, CEO of Fine Sounds SpA, and Charlie Randall, longtime President of McIntosh Laboratory, Inc., have announced their plans for a management buyout of Fine Sounds Group in partnership with LBO France and Yarpa:

Mono and Stereo High-End Audio Magazine: Fine Sounds Group Bought Out By Management

[Still-One]

Very interesting. Thank you for posting.

[Bavarian05]

Huh. Not sure what I think about this. Maybe I'm worried for no good reason...?
I was very pleased with the direction Fine Sounds had taken Sonus Faber and ARC.

[Venere]

Has to be a good thing. Its two dedicated and passionate music and audio guys buying out a bunch of investment bankers who only care about the bottom line. Obviously both aspects of the business are important but i would rather own products driven by the engineers than the beancounters.

[cmalak]

Originally Posted by Venere

Has to be a good thing. Its two dedicated and passionate music and audio guys buying out a bunch of investment bankers who only care about the bottom line. Obviously both aspects of the business are important but i would rather own products driven by the engineers than the beancounters.

Well not quite. Management Buyouts (MBOs) are the equivalent of Leveraged Buyouts (LBOs) but with management on-board, meaning the management team of the firm being bought gets to roll over their equity stake into the new entity and often that stake may be goosed a little bit in the terms of the deal. What really happened here is that Quadrivio, the Italian private equity firm (very different from an investment bank) which had bought the different pieces, starting with Sonus Faber back in 2008, followed by ARC, Wadia and Sumiko, and placing the various businesses in the Fine Sounds Group, was now ready to flip their investment (i.e., sell) and the buyers are two French private equity firms, LBO France and Yara. So really the buyers are the two private equity firms and they have rolled over and probably enhanced the ownership stake of Charlie and Mauro in NewCo.

Basically all that has happened is Quadrivio has flipped its investment, presumably at a nice profit, and the new owners, LBO France/Yara/Grange/Randall will look to shepherd the company along it's next phase of development/growth and presumably in the next 4-7 years (typical holding period for a private equity firm), there will be another sale (what is termed in the private equity industry an "exit.")

For Fine Sounds, they now have new owners, with potentially deeper financial pockets supporting any growth investment capital, to continue growing this platform.

[Bavarian05]

Originally Posted by cmalak

Well not quite. Management Buyouts (MBOs) are the equivalent of Leveraged Buyouts (LBOs) but with management on-board, meaning the management team of the firm being bought gets to roll over their equity stake into the new entity and often that stake may be goosed a little bit in the terms of the deal. What really happened here is that Quadrivio, the Italian private equity firm (very different from an investment bank) which had bought the different pieces, starting with Sonus Faber back in 2008, followed by ARC, Wadia and Sumiko, and placing the various businesses in the Fine Sounds Group, was now ready to flip their investment (i.e., sell) and the buyers are two French private equity firms, LBO France and Yara. So really the buyers are the two private equity firms and they have rolled over and probably enhanced the ownership stake of Charlie and Mauro in NewCo. Basically all that has happened is Quadrivio has flipped its investment, presumably at a nice profit, and the new owners, LBO France/Yara/Grange/Randall will look to shepherd the company along it's next phase of development/growth and presumably in the next 4-7 years (typical holding period for a private equity firm), there will be another sale (what is termed in the private equity industry an "exit.") For Fine Sounds, they now have new owners, with potentially deeper financial pockets supporting any growth investment capital, to continue growing this platform.

Good post!

[Venere]

Thanks for the clarification. Didnt realize it was just swapping one equity firm for another but i should have. Sounds like it might be a positive step though based on your final conclusions. Lets hope so.