Mesa Boogie and Guitar Center

Tone Zone

New member
Viesczy":2e7j115r said:
Banking 101.

Derek

Viesczy":2e7j115r said:
I am a former banker, sorry.

Derek

Viesczy":2e7j115r said:
I am a former banker and well versed in how to.....

Derek


"I BIG BANKER! .......I BIG BANKER! .......ME SO SMART! I PLAY WITH LOTS OF DOLLARS .......ME WELL VERSED IN DA WAYS OF B.S. .......ME SO SMART! ME HAVE LONG RESUME .......YOU LIKE SEE? :jerkit:
 

Chris O

Well-known member
danyeo":2o1y835w said:
Here's an article about GC workers trying to launch a Union. and EKKK, they really don't make much money do they? Unless you're selling a TON to get the commission.

http://www.huffingtonpost.com/2013/04/2 ... r=Politics


Hm... So let's summarize...

1. Mitt Romney = Bain Capital
2. Unionization = arch rival of the "Republican brand"
3. A long suffering company with huge debt, and employees who can't understand that you can't get more from a company that is already broke, and rather than understanding the situation, you pitch a fit and demand more of what is already lacking.
4. The inability of Americans to grasp the fact that it's better to have a job that doesn't pay as well as you want over having no job at all. Then blame "the man" for it.
5. Company goes belly up, workers go on the Obama employment plan, and sit idle for two years while "looking for a job".
6. Huffington Post reports it and calls it journalism.

Yep...makes perfect sense to me.
 

stephen sawall

Well-known member
The evil rich people is a very popular myth in many incarnations around the world. They have been selling it for years. I had a friend tell me the other day it is not their fault - greed is a very natural human behavior. Sounds like even the wealthy are a victim of this horrible thing know as human behavior. Everyone is a victim - if you are familiar with Karpman's Drama Triangle...
 
Viesczy":hzy99s7v said:
kalt":hzy99s7v said:
Viesczy":hzy99s7v said:
angelspade":hzy99s7v said:
Viesczy":hzy99s7v said:
Did I miss where Bain Capital was pointed out as the company that saddled GC with the suffocating debt?

Gotta love pirate capitalism.

Derek

I'm not certain what you mean by this exactly. As you may already know, Bain typically invests in entities that that have one foot in the grave to begin with. In the majority cases, the companies that they take a position in face certain failure without the capital injection, credit restructuring and debt consolidation backstop that they bring to the table. GC did not have a proverbial "gun to their head" to accept the intervention offered by Bain. Bain invests in troubled, and often over-leveraged businesses; Some of their investments work out, many do not. In the case of GC, almost all of the "equity" has evaporated and it is not their business model to own the real estate assets that they occupy, so their is no recapture in that regard. This leaves the liquidation of current inventory, and other assets...which carries some marginal value. That being said, the reality is that it is doubtful (in my opinion) that they will recoup their investment as they positioned at a "buy-out" per share price of $63.00, or a total investment of approximately $2.0 billion. The only real winner in this dismal transaction is Goldman Sachs (as usual), whom acted as lead banker / underwriter on the deal...And of course institutional shareholders whom collected an approximate 25% premium on the per share actual trading value when Bain made their "rescue" investment. Net conclusion: I do not expect that Bain will fair particularly well in the wind down, and ultimate liquidation of GC's relatively modest hard assets. I know that it was common media practice to paint Bain Capital as an evil entity throughout the recent election cycle, but the truth is far simpler: They risk big, lose big and occasionally win big...As they should, understanding the low probability arbitrage space that they traffic in.

Bain already paid themselves with the loans that they made GC take to then pay Bain, saddling GC with even greater debt. The "loss" Bain will realize only helps their tax position.

Banking 101.

Derek

Not sure this is an accurate representation of the transaction and how it applies with respect to a private equity infusion of capital from a collateralized purchase of a public company. This was a leveraged buyout (LBO). Bain didn't "pay" themselves and didn't "make GC take loans". They purchased GC with debt secured by the cash flow and assets of GC. Once acquired, those loans become the obligation of the acquired entity. Ultimately, the shareholders agreed to this as the purchase price was offered at least a 25% premium over market. The real challenge here is that this was done pre-credit crunch and now with the economic slowdown and recent history of a lack of liquidity in the credit markets, the debt service (and subsequent debt restructuring) has become cost prohibitive. In other words, they cant generate enough revenue to pay their bills. Ultimately, Bain will come out positive as they used OPM to buy GC and quarantined the bad debt in the process.......

Not a fan of GC but I hate to see all those people without work.....

In simplest terms it was, putting acronyms (LBO) and quibbling over verbiage (make GC take loans) doesn't change the raw transaction at the core. I am a former banker and well versed in how to spread excrement to make/hide questionable actions or make suck actions seem perfectly normal.

This is going to get a little off topic, but that lack of liquidity in the credit market comes from whom? Really, from whom?

Derek

Thanks...But Bain and it's investors will show a loss when GC goes BK.
 

borninwinter

New member
Viesczy":1hlsys4x said:
borninwinter":1hlsys4x said:
Viesczy":1hlsys4x said:
angelspade":1hlsys4x said:
Viesczy":1hlsys4x said:
Did I miss where Bain Capital was pointed out as the company that saddled GC with the suffocating debt?

Gotta love pirate capitalism.

Derek

I'm not certain what you mean by this exactly. As you may already know, Bain typically invests in entities that that have one foot in the grave to begin with. In the majority cases, the companies that they take a position in face certain failure without the capital injection, credit restructuring and debt consolidation backstop that they bring to the table. GC did not have a proverbial "gun to their head" to accept the intervention offered by Bain. Bain invests in troubled, and often over-leveraged businesses; Some of their investments work out, many do not. In the case of GC, almost all of the "equity" has evaporated and it is not their business model to own the real estate assets that they occupy, so their is no recapture in that regard. This leaves the liquidation of current inventory, and other assets...which carries some marginal value. That being said, the reality is that it is doubtful (in my opinion) that they will recoup their investment as they positioned at a "buy-out" per share price of $63.00, or a total investment of approximately $2.0 billion. The only real winner in this dismal transaction is Goldman Sachs (as usual), whom acted as lead banker / underwriter on the deal...And of course institutional shareholders whom collected an approximate 25% premium on the per share actual trading value when Bain made their "rescue" investment. Net conclusion: I do not expect that Bain will fair particularly well in the wind down, and ultimate liquidation of GC's relatively modest hard assets. I know that it was common media practice to paint Bain Capital as an evil entity throughout the recent election cycle, but the truth is far simpler: They risk big, lose big and occasionally win big...As they should, understanding the low probability arbitrage space that they traffic in.

Bain already paid themselves with the loans that they made GC take to then pay Bain, saddling GC with even greater debt. The "loss" Bain will realize only helps their tax position.

Banking 101.

Derek

Maybe I'm missing something, but I have a hard time seeing how they're making much of anything in this scenario, can you explain the banking 101?

I am a former banker, sorry.

I'll spin it in smaller #s and a personal level.

My company buys your company for $50. Then as owner of your company I take out $100 in loans in the name of your company and pay myself back 2 to 1. I then let your company founder and be run ito the until I can unload it, secretly hoping to sell it at a loss as it helps my tax standing for the year I sell it.

I spend $50, get $100 back from the loan and when it is sold, if it goes for a loss my tax situation is improved and if it is sold for a gain, I make even greater than a 2 to 1 payback.

I'm set up to prosper no matter what.

Derek

Not a financial guy at all, but still doesn't seem to add up to me.

Doesn't Leveraged Buy Out mean the loans are being paid back to someone other than Bain?

Not sure how they just decide to go 2-1 payback on a loan.

If you own the equity in the business why would you run it into the ground just for a better tax position? Wouldn't the potential for return be greater if you could turn the business around and make the value of the equity increase rather than by selling it at a loss and using that on the taxes? In other words, a loss for tax purposes might be the best case scenario now, but seems unlikely that the whole transaction was conceived with that idea in mind.
 

yes indeed

New member
The music retail business is a specialized business. It is small compared to most other industries. Entry level products have been in discount chain stores forever but anything above entry level is even a smaller market and more specialized. In fact these chains have traditionaly only devoted a shelf or two in their electronics section to it. What was private equity thinking when they thought it was a good idea to be involved in this industry? I guess win or lose they win but at a huge cost to alot of people. The employees, manufacturers, small business, and the consumer. So while they circle the bowl one can only hope that they don't take anyone else down the toilet with them and as far as their online conterparts go.. their only "leg up" on their competition is a sales tax collection issue so when that changes and the savings are not there they will may meet the same end. Then maybe the manufacturers will start spending money on research and development of new and interesting products that set the ground work for the creation of new music and another generation of inspired musicians.
 

borninwinter

New member
yes indeed":1blgmrig said:
The music retail business is a specialized business. It is small compared to most other industries. Entry level products have been in discount chain stores forever but anything above entry level is even a smaller market and more specialized. In fact these chains have traditionaly only devoted a shelf or two in their electronics section to it. What was private equity thinking when they thought it was a good idea to be involved in this industry? I guess win or lose they win but at a huge cost to alot of people. The employees, manufacturers, small business, and the consumer. So while they circle the bowl one can only hope that they don't take anyone else down the toilet with them and as far as their online conterparts go.. their only "leg up" on their competition is a sales tax collection issue so when that changes and the savings are not there they will may meet the same end. Then maybe the manufacturers will start spending money on research and development of new and interesting products that set the ground work for the creation of new music and another generation of inspired musicians.

Agree that is was probably a bad idea to see much potential in the GC model going forward. Not sure I agree that private equity involvement was a "huge cost" to a lot of people. If anything, it seems like they kept a sinking ship afloat for a few more years than it would have been otherwise. Doubt that the employees are going to have a hard time finding a comparable sales job - take the gear aspect out of it and it's just a run of the mill retail sales job. You can probably get a job at any local store selling whatever and be more or less in the same position. Gear will presumably still be sold, so an increase in work for those that work at online retailers and the successful smaller shops with a good internet presence. If you're a manufacturer and not caught up in the GC mess, then it's just a matter of selling to one company vs another. Probably not good for Fender/Gibson as I understand they have a lot of money in GC, but would that have been any different without private equity?
 

yes indeed

New member
What is different is that the market is completly flooded and that has effected the value of used gear as well. The market would not have been this flooded if it had not been for private equity and the volume that they feel they need to do. The manufacturers have enjoyed this sales growth but it is not sustainable or even "real" sales growth. Just a bunch of smoke and mirrors. Instead of pumping out unit after unit to meet a demand that isn't there...companies may be able to invest in new products that set a coarse for new "real" growth instead of the same recycled stuff in order to grow their business.
 

borninwinter

New member
yes indeed":15ihbtx5 said:
What is different is that the market is completly flooded and that has effected the value of used gear as well. The market would not have been this flooded if it had not been for private equity and the volume that they feel they need to do. The manufacturers have enjoyed this sales growth but it is not sustainable or even "real" sales growth. Just a bunch of smoke and mirrors. Instead of pumping out unit after unit to meet a demand that isn't there...companies may be able to invest in new products that set a coarse for new "real" growth instead of the same recycled stuff in order to grow their business.

Guess I don't know enough to have an opinion on whether it's true or not, certainly seems possible. I personally haven't found GC's recent offerings product or service wise to be of much value. The only thing I wonder is whether this isn't more an effect of the broader economy, meaning people just have less money to spend on things like gear, so prices come down.
 

Chris O

Well-known member
Why is GC still opening new locations?

Why does the Minneapolis/St Paul area have 4 of them?

And to the point of "completely flooded", 2 of the 4 GC's here, including the former flagship store here have very little on the shelves. It would seem that aggressive expansion is certainly a culprit, as it not only is costing GC a mint to keep them all open, but it also diluted the knowledge of the sales force to a frightening degree. I remember "back in the day" when I'd walk into GC, and it was the same people working every time I walked in, and they knew their stuff. I bet they made decent coin then too, and they certainly seemed to enjoy their jobs, and took some pride in it too. I see that as a generational thing to a large degree though - we have a different breed of "employee" these days, but I digress... The stores were better kept, the guitars were better maintained (sorta), and they had a good mix of gear. *Sigh*...
 

yes indeed

New member
Opening up new stores is the smoke in mirrors..and the companies that are in too deep are holding their breath to see what's next. Consolidation.. restructuring.. fancy words for done like dinner.
 

richardt4520

New member
Not knocking GC because there are some guys locally that really know their stuff but when they don't...oh man.

Guy behind the counter at GC Arlington today: Can i help you?
Me: yeah I need to pickup a 12AX7
The guy walks from behind the counter and starts looking around the showroom on the floor (?)
Guy: Is that a cord?
Me: No, it's a tube. Since you guys are clearing out your Mesa stuff, Mesa would be fine.
The guy walks back behind the counter, looks it up and gives me the price.
Guy: do you have a preference of country?
Me: Nah.
He disappears for a while and comes back with a Russian 12AX7.
Guy: It's russian. Too bad we're out of the German ones. Those are the best.

WTH?!!!
 

Chubtone

Well-known member
yes indeed":3qgrgx7w said:
Opening up new stores is the smoke in mirrors..and the companies that are in too deep are holding their breath to see what's next. Consolidation.. restructuring.. fancy words for done like dinner.

I agree with everything this guy is saying.
 

kalt

Member
Chris O":nmnims5h said:
danyeo":nmnims5h said:
Here's an article about GC workers trying to launch a Union. and EKKK, they really don't make much money do they? Unless you're selling a TON to get the commission.

http://www.huffingtonpost.com/2013/04/2 ... r=Politics


Hm... So let's summarize...

1. Mitt Romney = Bain Capital
2. Unionization = arch rival of the "Republican brand"
3. A long suffering company with huge debt, and employees who can't understand that you can't get more from a company that is already broke, and rather than understanding the situation, you pitch a fit and demand more of what is already lacking.
4. The inability of Americans to grasp the fact that it's better to have a job that doesn't pay as well as you want over having no job at all. Then blame "the man" for it.
5. Company goes belly up, workers go on the Obama employment plan, and sit idle for two years while "looking for a job".
6. Huffington Post reports it and calls it journalism.

Yep...makes perfect sense to me.


:thumbsup:
 

kalt

Member
Tone Zone":3or9ajp0 said:
Viesczy":3or9ajp0 said:
Banking 101.

Derek

Viesczy":3or9ajp0 said:
I am a former banker, sorry.

Derek

Viesczy":3or9ajp0 said:
I am a former banker and well versed in how to.....

Derek

:LOL: :LOL: :LOL: :LOL: :LOL: :LOL: :LOL: :LOL: :LOL: :LOL:
"I BIG BANKER! .......I BIG BANKER! .......ME SO SMART! I PLAY WITH LOTS OF DOLLARS .......ME WELL VERSED IN DA WAYS OF B.S. .......ME SO SMART! ME HAVE LONG RESUME .......YOU LIKE SEE? :jerkit:
 

UberschallEL34

Well-known member
Local GC in Houston had NEW Boogies marked down

MkV Head = $1999
Triple Rec = $1699
TA-30 Head = $1199
4x12 Cab = $849

they're blowing out all boogie brand stuff, wonder what (if anything) will be the brand that replaces Mesa for the higher end amps (local Houston store is a Platinum so they have other brands like Bogner, Hughes & Kettner)

had some fancy Ecstasy 20th with KT88, didn't want to plug into as I don't need to gas for a $4300 head.
 

Atropos_Project

New member
I was told by a local dealer that if there's an established MB dealer already, then a GC close to that shop won't be allowed to sell them. Sure enough, this is exactly the situation in my area.... the GC near me only has the occasional used Boogie.

Not sure how these stores fare in other areas, but it doesn't seem like there's enough musicians around here to actually support the store. Beginners are somewhat infrequent, and the pickier players are going to take their business elsewhere, or shopping online.
 

LPMojoGL

Active member
Screenshot_20210812-121059.png

And they're back.
 
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