Gibson is no longer in bankruptcy. Their balance sheet was restructured in late 2018. As part of the restructuring, their financial sponsor, KKR (private equity firm), converted their Gibson bonds to a sizeable equity stake, which means KKR now has more control (via board seats, etc). And KKR will want to sell/exit that equity stake in ~3 to 5 years, so they have an incentive to grow Gibson as much as possible to realize an attractive return. This growth can be achieved organically (market share capture, cost cutting, etc) as well as through accretive bolt-on acquisitions, as seen here. With interest rates as low as they are now, it’s likely this acquisition was financed with very cheap debt, and I wouldn’t be surprised if you see more Gibson bolt-on acquisitions in the not-too-distant future. It’s how the private equity game is played, for better or worse...
Gibson buys Mesa Boogie
- Thread starter Wizard of Ozz
- Start date
Gibson is no longer in bankruptcy. Their balance sheet was restructured in late 2018. As part of the restructuring, their financial sponsor, KKR (private equity firm), converted their Gibson bonds to a sizeable equity stake, which means KKR now has more control (via board seats, etc). And KKR will want to sell/exit that equity stake in ~3 to 5 years, so they have an incentive to grow Gibson as much as possible to realize an attractive return. This growth can be achieved organically (market share capture, cost cutting, etc) as well as through accretive bolt-on acquisitions, as seen here. With interest rates as low as they are now, it’s likely this acquisition was financed with very cheap debt, and I wouldn’t be surprised if you see more Gibson bolt-on acquisitions in the not-too-distant future. It’s how the private equity game is played, for better or worse...
ElectricVoodoo
Well-known member
Is it really surprising? After one of the worst years in history on all levels? Sure, with quarantine, people played more, but the focus was most likely and primarily home based recording gear.
Both of the brands probably needed each other to survive. Artists are starting to sell their catalogs more than ever as well. No area was exempt from what happened.
The economy is extremely volatile and fragile. I wouldnt be surprised to see this occur more frequently with other major brands at this rate.
Both of the brands probably needed each other to survive. Artists are starting to sell their catalogs more than ever as well. No area was exempt from what happened.
The economy is extremely volatile and fragile. I wouldnt be surprised to see this occur more frequently with other major brands at this rate.
dirtyfunkg
Well-known member
Exactly this right here.
Debt is so cheap right now, and the synergies between Mesa and Gibson would make the ROI on this pretty lucrative.
What surprises me more about it, is how quiet things were. Other strategic buyers may have jumped on Mesa if they knew the opportunity existed. I'm sure Mesa's board would have wanted a go-shop period after KKR/Gibson made their initial bid.
Hell, Fender could have acquired them and, along with the EVH/5150 line, essentially cornered the high gain amp segment and leveraged the history between Mesa and Fender to do some pretty well marketable partnership amps. Add in the distro footprint and amp production operation/infrastructure already being in place (including supplier relationships, etc), and Fender could have really maximized Mesa's growth potential.
Yamaha could have bought them and made Mesa their entire amp line. They have as big a distribution footprint as anyone, particularly worldwide... and the collaborations with Line 6 could have been enticing.
This does bring up questions about the future of some of the other legacy high gain "boutique" amp builders. Soldano has already sold to BAD. Reinhold Bogner, Peter Diezel, Steve Fryette... even Dave Friedman... all are only getting older and will eventually have to figure out a succession plan or (more likely) cash out.
It seems like Diezel has some younger blood (relatively) there ready to take the reins when Papa chooses to step back, but the others, I'm not so sure.
Mesa was the biggest fish of them all, but don't be surprised if the others are thinking about their exit strategies.
Private equities are managed investment funds and so were hedge funds of 2008. Sorry for all that to work the sum of all the parts has to work.
I don't have the faith that it will and all parties involved with do the right thing.
Markedman
Well-known member
By September 2020, it was reported that Fender had sold more guitars in 10 months than it had in any year previous. I posted that fact on a thread here about it. I would imagine Gibson had a pretty good year.
https://www.google.com/amp/s/www.gu...rs-in-2020-than-any-other-year-in-its-history
I'm no Music Industry fanboy or even keep up on most trends and brands, but the new Management at Gibson seems to be better than the last few teams/owners.
https://www.google.com/amp/s/www.gu...rs-in-2020-than-any-other-year-in-its-history
I'm no Music Industry fanboy or even keep up on most trends and brands, but the new Management at Gibson seems to be better than the last few teams/owners.
Last edited:
Both brands not "needing" but "hoping" to survive. There's a difference.
Yep, very good points regarding the smaller builders. All of those guys aren't spring chickens.
As you mentioned, I wonder if Mesa ran a formal sale process / bid solicitation. Would love to get my hands on the marketing materials if so.
They have something in common: make bad models nobody want
TranslAtlantic, Nomad, Electra Dyne, Triple Crow...
People just want a good Les Paul standard and a Mark II or III. But no, is too easy.
meanstreet
Member
Randall is in his mid 70s. Seems like he decided to cash out while he could still enjoy it. Hopefully he’ll still be involved for a while (as it says he will be), just on Gibson’s dime!
dirtyfunkg
Well-known member
They have something in common: make bad models nobody want
TranslAtlantic, Nomad, Electra Dyne, Triple Crow...
People just want a good Les Paul standard and a Mark II or III. But no, is too easy.
Some people.
It's all market segmentation.
The Mark V and JP2C are supposed to placate those that still want a Mark II or Mark III, but (particularly with the Mark III and Mark IV) it's really hard to keep producing the same model when the used market is going to get saturated and compete with your new production. You can only continue producing the old stuff if you have the production capacity to do that along with innovating and producing new products. That involves risk. For every Dual Rectifier there are countless "failed" models that either never see the light of day, or tank once they do. It's also the same reason it makes business sense to keep evolving lines. The Rectifiers have had how many revisions now? And how long is a thread on Rig Talk when someone asks which one is the "best"?
But when you've build the brand value as Mesa has... that high school kid who can't afford a Recto or Mark is going to look at that the other more affordable models because they say "Mesa Engineering" on the front, even if they aren't the flagships. And you can't ignore that lower budget demographic because there is a LOT of money to be made from those folks. And these are the folks that will eventually "graduate" to the flagships when they have cash to burn. And they'll also eventually end up on Rig Talk, Grailtone and the like to debate thinks like us nutcases
. I remember being in high school lusting for a Mesa amp, and playing gigs on bills with pop-punk bands with Rectos thinking "This kid's parents must be rich because he sure doesn't deserve this amp based on his playing." Then another jam band where the guitarist had, IIRC a .50 Cal Mesa head (he also was pretty terrible), but it was clear he got that amp because he was a big Trey Anastasio fan and couldn't afford a Mark III like Trey, so he got an amp that looked the most like a Mark III at the time that fit his budget.
The reason Gibson went bankrupt is because they got off track of their core mission of making guitars.
So fresh out of bankruptcy what are they doing ?
Getting off track again.
Gibson as a company can't manage their way out of a wet paper bag.
And my guess is Randall Smith is getting paid either way & laughing all the way to the bank.
webrthomson
Member
Markedman
Well-known member
"Guitar Center, meanwhile, has reported triple-digit growth for most top brands on its website, and Brendan Murphy, a senior salesman at Sweetwater, said, “I’ve been in the instrument retail business for 25-plus years and I’ve never seen anything like it. It feels like every day is Black Friday.”
https://www.rig-talk.com/forum/threads/gibson-restructuring.196569/
From "The Boogie Board" -
Re: Has Gibson Acquired Mesa?
https://www.rig-talk.com/forum/threads/gibson-restructuring.196569/
From "The Boogie Board" -
Re: Has Gibson Acquired Mesa?
- Report
- Quote
- Unread post by Authorized Boogie » Wed Jan 06, 2021 2:58 pm
We appreciate all your thoughts - We’re excited about our partnership with Gibson! We are not only running operations with the same people including designers, craftsman and service team but now have the support and passion of the Gibson team to drive our pursuit of tone to new levels around the globe. And passionate about Mesa Boogie they are! Our day-to-day operations are unchanged, as is our dedication to producing the highest quality, boutique custom shop amplifiers and providing superior customer service to the entire MESA family. Thank you!
MESA/Boogie - Product Specialist/Customer Service - http://www.mesaboogie.com/support/index.html
Last edited:
technomancer
Well-known member
Snipped it down, but Friedman is already owned by BAD and Fryette has some pretty heavy ties there as well with the Synergy stuff.
As for the Gibson / Mesa deal, I look forward to the $8k True Historic Mark IIC+ with period correct knobs
blackba
Well-known member
They have something in common: make bad models nobody want
TranslAtlantic, Nomad, Electra Dyne, Triple Crow...
People just want a good Les Paul standard and a Mark II or III. But no, is too easy.
Mesa has been trying to expand their line up and IMO has released some cool amps in the last few years including the triple crown, cali tweed, fillmore, and transatlantic and for pretty reasonable prices.
I expect the prices for the post Gibson mesa's to go up as Gibson is known for charging a boatload.
Tone Merchant
Active member
Friedman is not owned by BAD, Dave and I own are the owners.