Wow! Say it ain't so. (Sweetwater)

[RABid]

So, has Sweetwater really been bought out?

 

[video:youtube]

[Mike Martin]

Chuck Surack is still Chairman of the Sweetwater Board.

 

The reality is now that Sweetwater is over a billion dollar company. Managing the growth of a company this size is a very daunting task. Chuck however is very involved in many things outside of Sweetwater with his other "Sweet" business and other growth opportunities in Fort Wayne. He does so much for the community of Fort Wayne and that is where much of his is attention is now and has been for the last several years.

 

I don't know who this guy is in the video but I don't share his skepticism.

[allan_evett]

 

I don't know who this guy is in the video but I don't share his skepticism.

 

Agreed. Too much generalizing and negative speculation. While it's possible that a few changes could eventually transpire, Sweetwater is NOT GC, or any other company. I find the comparisons somewhat suspect. I skimmed later parts of the video, then ended up shutting it off early... :blah: :blah:

[Docbop]

When Suits come in customer service and other departments start getting cut to barebones because they aren't the revenue generators. Been through that too many times working in the computer world and moving into corporate world. These big investment companies just don't understand good prices and great customer service are why the company they are investing in are loved by their customers. The Suits only see profit margins and that we can cut a little here and there, the problem is the keep cutting and cutting and cutting till they've ruin who they invest in.

 

 

Too bad the owner of Sweetwater didn't create a investment group of big name artists and producers and keep the company owned and run by the type of people that buy from Sweetwater.

[ElmerJFudd]

Oh crap. Capital investment company. I feel for the entire staff from the managers, sales associates, to the stock room, to the repair shop, to the cleaning service. These boards are only ever interested in the bottom line, period. They spend all their time analyzing numbers, every hour, every week, every month.

 

They typically have no interest in the product, what makes the business "unique' from any other business - in staff or in customers.

 

It probably means nothing for our experience with the shop except for maybe losing the staff we are familiar with when they leave, are fired, or retire early.

 

Just my experience with this process in several situations. ymmv

[o0Ampy0o]

It's either that or once they have trimmed overlapping positions and overfunded departments the suits neglect an investment to death confident about more profit while believing it will just carry on as it had.

[Motif88]

'I don"t share his skepticism'â¦'Chuck is still the chairman'â¦yeah, that has obligations to the board, the shareholders and the investment company.

 

What a gullibull, what a nincowpoop!

 

For those that think the video was too negative, it"s obvious you haven"t worked in corporate america or understand that the bean counters run the show. If you bothered to watch the whole video, you would have heard hopes for a different path than 90%+ of the other buy-out victims. Instead of tuning out, maybe you should tune in to have a better understanding. If not, I hope you continue to enjoy your ignorant bliss.

 

I"m hoping and praying for an exception, but it would be just that. An exception.

[Doerfler]

This news came out several months ago. Don't know why people are getting their panties up in a bunch right now

[ElmerJFudd]

It is what it is. Every business will sooner or later be purchased by one of these entities - and it"ll all be called Amazon.

[Jonathan Hughes]

"Don't know why people are getting their panties up in a bunch right now"

 

Probably because no one had heard about it until now. I look at a bunch of music sites daily and hadn't heard anything about this until I saw this video a couple days ago.

 

I'm with those who don't think this will be good for customers and employees in the long run (and probably starting in the near future). I've never heard of an example of a company that went public or was bought by venture capitalists or investment groups that improved in terms of treatment of employees or customers. Those groups are interested in profit (in particular, short-term profit), and anything that decreases profit is going to be scrutinized. I don't buy a ton of equipment, and I don't buy it all from Sweetwater. I'm also not into bickering about price. But it's nice to have someone consistent to deal with who can occasionally make price adjustments based on the fact that you've bought from them in the past. That's the kind of thing that could easily change.

 

My guess is that the candy will stay. It's cheap and meaningless, and its continuity would imply that nothing has changed (regardless of whether you're paying more and getting poorer service).

[miden]

It is what it is. Every business will sooner or later be purchased by a one of these entities - and it"ll all be called Amazon.

 

^^^^ This LMAO!! I shouldn't as it is serious, but so true!!

[Docbop]

It is what it is. Every business will sooner or later be purchased by a one of these entities - and it"ll all be called Amazon.

 

^^^^ This LMAO!! I shouldn't as it is serious, but so true!!

 

 

Then the Chinese will buy Amazon.

[El Lobo]

I've never heard of an example of a company that went public or was bought by venture capitalists or investment groups that improved in terms of treatment of employees or customers.

It's hard to imagine that Sweetwater customer service could improve. It's essentially what they're selling, the gear is the same stuff that I can get on Amazon for the same price. When you're all the way at one end of the scale, there's only one way to go.

[TommyRude]

Here is a cost cutting measure I can recommend to the new ownership. If you cut out the candies, you will save $$ that go directly to the bottom line - approx $1M (5M packages * .$0.20/pkg = $1M). Further, you will reduce the teeth decay on countless musicians, reducing their respective dental bills and unnecessary trips to the dentist. Hence, you are not only increasing profitability, but improving the local communities and their artists. Win win. Call me if you need any additional world class financial, operational and cultural advice.

[KuruPrionz]

I've been through 4 corporate takeovers. None of them were pretty.

 

Bean Counters do what I call "tearing the wing off the bird." They analyze and say "The wing, it is not profitable, get rid of the wing." Then a little while later they say "The bird, it cannot fly, we must discard the bird."

 

When you think in terms of "controllables" (wages and capital expenses) instead of customer service, things will change.

 

Things will change...

[o0Ampy0o]

It's hard to imagine that Sweetwater customer service could improve. It's essentially what they're selling, the gear is the same stuff that I can get on Amazon for the same price. When you're all the way at one end of the scale, there's only one way to go.

Whether you consider it customer service or sales, there is at least one way things could improve. Every time I buy something from them the salesperson calls me for months asking if there is anything they can do for me. I don't need help like that but you might help by discouraging me from buying something, maybe don't take my order.

[elsongs]

All I really care about the acquisition is this:

 

 

 

Will my Sales Engineer still bother me with random phone calls?

[Tusker]

In my experience as an m&a consultant dealing with hundreds of clients and thousands of case files over decades ... yes it it true that as power shifts to the buyers of a business, the policies change. Yes it is true that placing a founder as chairman of the board, is a way of retaining his/her personal brand, while reducing his/her ability to prevent the changes the buyers deem necessary. It's your classic demotion through promotion (which can be difficult for a founder to endure for long). All that aside .... my interest is Chuck's age.

 

How old is Chuck? If he is in his fifties or sixties, well done. Most founders have great difficulty executing plans for leadership continuity. It's hard to build a brilliant business and still be willing to cede control of it in a timely, orderly fashion. Congratulations!!

[felis]

 

Then the Chinese will buy Amazon.

 

 

Chamazon

 

 

 

https://www.wane.com/news/investment-group-partners-with-sweetwater-for-next-phase-of-growth/

[RABid]

.... my interest is Chuck's age.

 

How old is Chuck? If he is in his fifties or sixties, well done. Most founders have great difficulty executing plans for leadership continuity. It's hard to build a brilliant business and still be willing to cede control of it in a timely, orderly fashion. Congratulations!!

 

That was my thought. He has worked hard over the years and built an empire. Why not retire in time to enjoy it? And what better time to sell than after they hit number one. Someone mentioned earlier that this came out months ago. We talked about it here at that time, then the news went away. I assumed it was either rumor or the deal had fallen through. But, looks like it is finally finalized. I honestly don't take this news to be as big as the Behringer deal. For me, the Behringer deal was really strange. You have a music store with a reputation of being upfront, honest and helpful becoming exclusive dealer (well, along with Amazon) of a company known for cheap products and blatantly copying other companies designs. Chuck's retirement, gotta happen sometime. Behringer deal, shocking.

[RABid]

It's hard to imagine that Sweetwater customer service could improve. It's essentially what they're selling, the gear is the same stuff that I can get on Amazon for the same price. When you're all the way at one end of the scale, there's only one way to go.

Whether you consider it customer service or sales, there is at least one way things could improve. Every time I buy something from them the salesperson calls me for months asking if there is anything they can do for me. I don't need help like that but you might help by discouraging me from buying something, maybe don't take my order.

 

I've had problems with customer support over the years. My first rep would cold call me at work just to ask if I needed cables or anything else. I tried to tell him not to call me at work but it did not help. One day the CEO's secretary pulled me out of a meeting telling me I had an important call. It was my rep wanting to know if I needed anything. He never told anyone who he was, only that he really needed to talk to me even after they told him I was in a meeting. I was really mad and posted about it here on this forum. Back then someone high up at Sweetwater used to monitor these forums. They immediately got me a new rep.

 

The other problem I had is the order process. The order is not finalized until your rep, or someone covering on days off, signs off on it and sends it to shipping. For a while I had a rep that was very lax about this. Sometimes he would wait a week or longer to process the order. Sometimes I would call and ask about me order. He would be like "Oh. Ummm." Finally I called management, told them to look at my order history and compare date ordered to date processed by my rep. Now I have a very good rep and if he is off the person covering for him processes the order really fast.

[slowtraveler]

Private equity deals come in a variety of different flavors, and outside investors can be smart or not so smart. It's a mistake to assume that all PE deals are the same, or that this event is disastrous for the customers' interests.

 

I have not seen the deal terms disclosed, but the investment by Providence is characterized as "growth equity" rather than a buyout. Sweetwater, having been very well-managed, and having led the way in the MI industry's shift from bricks-and-mortar to online distribution, has strong growth prospects and no apparent incentive to accept outside investment on unfavorable terms. I would very much like to know what their balance sheet looked like both pre- and post-deal, but I would not expect an over-leveraged Guitar Center-type fiasco.

[PianoMan51]

Sweetwater revenues jumped 25% from $800 million in 2019 to $1 billion in 2020. They"re not in trouble and in need of a white knight. They have a business model unencumbered by physical stores, and well differentiated by legendary customer service. COVID provided an unexpected windfall.

 

During 2020 their biggest competitor Guitar Center"s revenues dropped slightly. COVID shutdowns of retail locations has wounded them in a time when large debt needed servicing.

 

Chuck Surack started Sweetwater in 1979. 41 years ago. Every business owner reaching a certain age has the issue of an 'exit plan" in mind. And Chuck owns 10 other businesses.

 

My initial interpretation is that Chuck is 'selling high". While the business is great.

 

And the new owners are buying Chuck out and providing the capital needed to hire new employees, buy more inventory and maintain a superior on-line infrastructure. All with the reasonable expectation of gobbling up a significant portion of Guitar Centers $2 billion a year revenue.

[Morrissey]

Sweetwater revenues jumped 25% from $800 million in 2019 to $1 billion in 2020.

 

During 2020 their biggest competitor Guitar Center"s revenues dropped slightly.

 

What is the source of this data? Not questioning it. Rather, curious to know if there is a ranking of large MI stores by revenue.

[ElmerJFudd]

I"m sure all realize this was inevitable and understand the life and business decisions that brought Chuck to this point. For Chuck it"s the pinnacle of his life"s work. The exasperation I believe, and you may disagree, has more to do with the frustrations of US employees who have been through this and the discomfort a change in culture creates. Not to mention the struggle of small business owners, particularly over the last two years and the idea that large corporations have benefited, or swooped in to take advantage of their weakened position. The truth is that Sweetwater hasn"t been a little mom and pop shop for a long time. As far as MI goes, Sweetwater has been a disruptor of mom and pop shops for decades.

[PianoMan51]

Sweetwater revenues jumped 25% from $800 million in 2019 to $1 billion in 2020.

 

During 2020 their biggest competitor Guitar Center"s revenues dropped slightly.

 

What is the source of this data? Not questioning it. Rather, curious to know if there is a ranking of large MI stores by revenue.

 

I googled"Sweetwater Sound buyout", but only found the usual PR verbiage about buyouts and mergers, which almost always obfuscate the terms of the deal and the motivations of the actors.

 

Then I googled"Sweetwater Sound revenues" and found info enough to answer my questions and yours.

[Ken Beaumont]

I too share the skepticism, I've seen way to many times that in these situations the founder of a company is eventually forced out and senior management is offered "take this generous severance or else" deals.

It doesn't happen quickly, tyrannical domination starts showing its intentions after about 2 years. Cynicism? Hell yes, but it is based on past experience. Good luck all the employees of Sweetwater, I hope I'm wrong.

[o0Ampy0o]

It is what it is. Every business will sooner or later be purchased by a one of these entities - and it"ll all be called Amazon.

^^^^ This LMAO!! I shouldn't as it is serious, but so true!!

Then the Chinese will buy Amazon.

 

In a sense China already owns Amazon.

If a product is not at least partially manufactured in your own country chances are all of it or the rest of it is manufactured in China.

 

 

 

BTW:

Being a race, there are Chinese people all over the world who do not support the politics of China.

There is no "Chinese" language spoken anywhere.

There are 300+/- living languages spoken within the country and its territories.

Mandarin Chinese happens to be the most widely spoken native language in the world.

[rickzjamm]

It's the quality customer service & sales guarantee that made me a customer, hope that doesn't change.

[Moonglow]

It's the quality customer service & sales guarantee that made me a customer, hope that doesn't change.

I hope they understand that these attributes translate to dollars and cents.