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David, I hope you are correct. However my past experience with private equity investment groups leaves me feeling rather pessimistic.
From the Pianist Corner:
Quote
They'll pull out of New York to harvest the capital in the real estate and move production to Mississippi, or more likely China, and Baldwinize the company. They'll extract everything of value possible. The Steinway name will become a luxury brand, think watches, luxury automobile editions, etc. They'll sell as much as possible in China, until the Chinese consumers figure out they're getting fraudulent goods.
They'll pay themselves million dollar salaries and bonuses, eventually declaring bankruptcy after they finish raping and pillaging the company.
Or maybe we'll get lucky and Samick will up the offer and buy them. Essex and Boston will move to Indonesia and the New York and Hamburg factories will remain operating, much like Seiler.
The quote from pianist corner is nothing but conjecture. It is similar to many postings in this thread. Conjecture is not fact. My opinion on the matter is that it is just too soon to forecast the outcome of the sale.
Marty in Minnesota
It's much easier to bash a Steinway than it is to play one.
It would be interesting to hear from someone at Steinway Corporate rather than from a franchised dealer. _________________________________________________
Something strange is going on. - My above comment was a response to BoseEric and that posting has disappeared.
Last edited by Minnesota Marty; 07/02/1301:26 PM. Reason: missing posting
Marty in Minnesota
It's much easier to bash a Steinway than it is to play one.
The Pianist Corner quote is just silly. Steinway already sold their Manhattan building, and the factory property is located in an industrial area of Queens. So it's not about real estate. Unlike other piano companies, Steinway has maintained their reputation by branding their less expensive products with different names (Boston and Essex). This has worked exceptionally well for Steinway. So the idea of changing that marketing plan makes no sense whatsoever. The value of the Steinway company is not as a break-up. There isn't anything there to break up. Steinway is doing very well financially, and both factories are building the best quality pianos they have ever produced. The value of the Steinway company has always been, and will always be, as a long term investment for its intrinsic brand equity and financial performance.
The value of the Steinway company is not as a break-up. There isn't anything there to break up. Steinway is doing very well financially, and both factories are building the best quality pianos they have ever produced. The value of the Steinway company has always been, and will always be, as a long term investment for its intrinsic brand equity and financial performance.
What you talk about is only the piano side of the business. Steinway Musical Instruments is the parent company to two divisions, piano maker Steinway & Sons and Conn-Selmer. The piano side also runs the Arkiv Music classical music recording label, a foundry and Lyngdorf home theater sound systems. Conn-Selmer is a collection of more than a dozen brands of instruments, including Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, and Leblanc clarinets. It would seem there's plenty to break up. How such a break up would impact the piano manufacturing side of the company remains to be seen.
The worrisome aspect is that the typical private equity firm is interested only in maximizing shareholder value and that usually means stripping out any cash, raiding any pension fund, loading all the divisions up on debt and selling them off. Is Kohlberg a typical private equity firm? We don't know and only time will tell. It's possible their intent is to improve operational efficiency or find some other way to enhance value for their shareholders. That is the bottom line their intent is to enhance value for shareholders and you can bet they have a plan to do that. Nobody spends $438 Million without a plan to realize better than market growth of their investment. The status quo is not an option.
Thanks, Steve. That was an interesting and balanced report. As I said earlier, time will tell.
From the link you provided, I was able to find this. All of the modern manufacturing clips are available, but this one goes back to an earlier era. It's fun to watch.
Thanks, Steve. That was an interesting and balanced report. As I said earlier, time will tell.
From the link you provided, I was able to find this. All of the modern manufacturing clips are available, but this one goes back to an earlier era. It's fun to watch.
In the news it says "Macquarie Group Ltd and General Electric Capital Corp. are providing financing to support Kohlberg & Co.’s $438 million acquisition of Steinway Musical Instruments Inc. "
Just after LVB paid off most of their debt with the sale of Steinway Hall, it looks like the new owning entity is taking on debt for the purchase. It is not clear to me how much debt, but this is extra expense (principal + interest) for the new Steinway entity with no clarified benefit. So far, the purpose of the debt is just so the new owners can have it.
I thought this case study of a kohlberg takeover was interesting.
It will be interesting to see whether the new owners are interested in growing the company, or stripping out all the profit they can make before tossing it aside.
I've watched this happen before. I hope it's the former rather than the latter. I would truly hate to see a venerable old piano company reduced to a shell of its former self just to make some investors richer.
My Keyboards: Estonia L-190, Roland RD88, Yamaha P-80, Bilhorn Telescope Organ c 1880, Antique Pump Organ, 1850 concertina, 3 other digital pianos ------------------------- My original piece on BandCamp: https://frankbaxtermrpianoworld.bandcamp.com/releases
Me banging out some tunes in the Estonia piano booth at the NAMM show...
"Market Place" on NPR had an interesting viewpoint on the sale. They seemed to indicate that the investment group is looking for "Luxury" manufacturers and want to polish the image and not destroy the company. They are going after high tag portfolio investors who get in their private jet to go pick out a Steinway. They also indicated the growing market in China is a target and that there is the cash available for individuals to buy an 'imported' piano. It really didn't seem like S&S would start building in China. Essex already caters to a specific market very well.
Marty in Minnesota
It's much easier to bash a Steinway than it is to play one.
Is this a bad timing to buy a new factory ordered Steinway?
Not at all!
Thanks Marty. Any insight into this? My concern is that Steinway staff members would be worried / distracted and some re-structuring may be taking place...
