Info Aqualung Financial Troubles

[runsongas]

@scubadada that was fallout after the suunto class action (aqualung was their NA distributor before it). to replace suunto they had to either start from scratch or acquire an existing dive computer company. PPS was the most convenient candidate because the Hollis family was at that point starting to step away.

the suunto class action was May 2015 and the PPS acquisition was later in August iirc.

 

[Eric Sedletzky]

Is this what happens when a company gets too big and too top heavy then has to fight for an increasingly thinner piece of the pie in an already dying sport?
It’s kind of unsettling considering they are one of the two biggest in scuba.

 

[runsongas]

nah, its a common theme for private equity takeovers.

Opinion | Private Equity Is Gutting America — and Getting Away With It (Published 2023)

Private equity firms make loads of money when their schemes succeed and lose very little when they fail.

www.nytimes.com

When Private-Equity Firms Bankrupt Their Own Companies

Private-equity firms can succeed when their companies, customers, and employees fail. It’s a broken system.

www.theatlantic.com

 

[cerich]

nah, its a common theme for private equity takeovers.

Opinion | Private Equity Is Gutting America — and Getting Away With It (Published 2023)

Private equity firms make loads of money when their schemes succeed and lose very little when they fail.

www.nytimes.com

When Private-Equity Firms Bankrupt Their Own Companies

Private-equity firms can succeed when their companies, customers, and employees fail. It’s a broken system.

www.theatlantic.com

MBAs in management lead to lower employee pay, study finds

Researchers point to the popularity of professional management degrees as one reason worker pay has declined.

www.cbsnews.com

asset stripping and redirection is profitable.

 

[lexvil]

MBAs in management lead to lower employee pay, study finds

Researchers point to the popularity of professional management degrees as one reason worker pay has declined.

www.cbsnews.com

asset stripping and redirection is profitable.

In the short term, which is all these guys are concerned with.

 

[OMyMyOHellYes]

Business plan:

1. Buy a load of crap.

2. Commence to polishing turds. Often involves "EBITDA Add-back Turd Polish and Preservative(TM)".

3. Sell "newly improved" turds, singly or en masse (preferably en masse - less work), hopefully for more than you paid for the pile of crap.

4. Take trophy wife or girlfriend (not at the same time) on a fabulous dive trip with all the bux you made.

 

[wnissen]

Is this what happens when a company gets too big and too top heavy then has to fight for an increasingly thinner piece of the pie in an already dying sport?
It’s kind of unsettling considering they are one of the two biggest in scuba.

Since the 1980s. In the leveraged buyout (LBO) era you mainly had big Wall Street firms making bets with their own money (a la Gordon Gekko), but the playbook remains the same. Buy an unprofitable company with underexploited assets (physical ones like buildings, or valuable brand names) at a slight premium on the current value. Then bring in new management and either massively cut costs to restore profitability, or split the company into the valuable parts and the trash. Send the dreck into bankruptcy, and sell the valuable parts for 2-5x what you paid originally. Rinse and repeat.

The only thing that's changed is that many smaller players are now raising private equity funds from pension plans, wealthy individual investors, etc. A lotta sharks out there are looking for companies to buy. And they're not risking their own money, it's a bunch of anesthesiologists who put up the money for the fund. The fund management makes their "2 and 20" (2% annually on the total amount invested, plus 20% of all the appreciation) so it bears almost no risk if the deal completely tanks. The investors and employees can lose their shirts, but the private equity doesn't care.

Back when firms were wagering their own money on the buyouts, the threshold for investing was pretty high. Target companies had to be really undervalued or mismanaged to get bought. Now companies that are only mildly struggling are targets. Aqualung will either be much more profitable or out of business entirely within five years or less. Probably a lot less! But the difference is in only in degree, not in kind.

 

[scubadada]

Very interesting Aqua Lung timeline, 80 years. They don't mention the Air Liquide sale to Montagu at the end of 2016

Our Story | Official Aqualung Diving Gear - Aqualung

Aqualung

us.aqualung.com

 

[Eric Sedletzky]

So bottom line, does this mean the possible end of Aqualung as we know it?
Pretty much a trainwreck in slow motion.

 

[OMyMyOHellYes]

Who knows?