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pisauron
Contributor
Shearwater Research Attracts New Majority Shareholder
Richmond, BC, Canada Bruce and Lynn Partridge and the management of Shearwater Research Inc. (“Shearwater”) are pleased to announce that BRS & Co. (“BRS”), a New York-based private equity firm, has today completed a control investment in Shearwater. The financial terms of the transaction were...
shearwater.com
BeerNye
Registered
For what it's worth, this was in 2021, and luckily Shearwater still is producing really great dive computers. Having said that, PE is almost always a net negative from what I have seen.Shearwater Research Attracts New Majority Shareholder
Richmond, BC, Canada Bruce and Lynn Partridge and the management of Shearwater Research Inc. (“Shearwater”) are pleased to announce that BRS & Co. (“BRS”), a New York-based private equity firm, has today completed a control investment in Shearwater. The financial terms of the transaction were...
Hoping for AL's sake that
Much like diving, though, I am not holding my breath.
-edited for some better clarity
There are still some PE firms that prefer to make money the old fashioned way of owning profitable businesses. Shearwater appears to be owned by one of those. Let's hope it lasts.
Unfortunately most PE firms prefer the quick returns approach of leveraged buyouts, with much of the buyout money being sucked out by the PE firm in the form of fees, followed by asset stripping (especially real estate) again with the proceeds paid out to the PE firm, followed by a bunch of firings in an attempt to make the balance sheet look acceptable despite the huge debt load, followed by ... the PE firm doesn't care at this point because they've already got their money. If the company somehow manages to survive all this, they'll sell it. If it doesn't, then it's the debt holders that take the loss. This is what happened to Aqualung.
But I have hope for Aqualung now. They are out of the PE spiral and are owned by an actual company that makes and sells actual goods - sporting goods! - at an actual profit to actual people. We don't know all details of the deal that was approved by the French bankruptcy court, but we do know that in general that court will happily shaft financial company debt holders in favor of keeping jobs and it looks the majority of the 50 million euros Head promised to put into AL is to pay off suppliers and get AL's production facilities running again.
Keep in mind that Aqualung was a profitable division of Air Liquide before it got sent into PE hell in 2016 because Air Liquide needed cash to fund its takeover of Airgas. Assuming much of its debt load has been wiped clean, there's no structural reason it can't be profitable again. Head also has the advantage of owning SSI which should make it relatively easy (which is not the same as easy) to expand ALs dealer network to shops that use SSI, and vice versa.
I have to say that I like how Head is running things. SSI is growing because it offers essentially the same thing as PADI does to shops and divers, but with both better and cheaper electronic resources. And starting around 10 years ago, Mares really starting investing in R&D, especially when it comes to regs. These have turned into real products making Mares by far the most active innovator in the regulator market for the past few years.
Unfortunately most PE firms prefer the quick returns approach of leveraged buyouts, with much of the buyout money being sucked out by the PE firm in the form of fees, followed by asset stripping (especially real estate) again with the proceeds paid out to the PE firm, followed by a bunch of firings in an attempt to make the balance sheet look acceptable despite the huge debt load, followed by ... the PE firm doesn't care at this point because they've already got their money. If the company somehow manages to survive all this, they'll sell it. If it doesn't, then it's the debt holders that take the loss. This is what happened to Aqualung.
But I have hope for Aqualung now. They are out of the PE spiral and are owned by an actual company that makes and sells actual goods - sporting goods! - at an actual profit to actual people. We don't know all details of the deal that was approved by the French bankruptcy court, but we do know that in general that court will happily shaft financial company debt holders in favor of keeping jobs and it looks the majority of the 50 million euros Head promised to put into AL is to pay off suppliers and get AL's production facilities running again.
Keep in mind that Aqualung was a profitable division of Air Liquide before it got sent into PE hell in 2016 because Air Liquide needed cash to fund its takeover of Airgas. Assuming much of its debt load has been wiped clean, there's no structural reason it can't be profitable again. Head also has the advantage of owning SSI which should make it relatively easy (which is not the same as easy) to expand ALs dealer network to shops that use SSI, and vice versa.
I have to say that I like how Head is running things. SSI is growing because it offers essentially the same thing as PADI does to shops and divers, but with both better and cheaper electronic resources. And starting around 10 years ago, Mares really starting investing in R&D, especially when it comes to regs. These have turned into real products making Mares by far the most active innovator in the regulator market for the past few years.
Tassi Devil Diver
Contributor
Which part?
The reason for the sale? It was something that was generally accepted at the time because of the circumstances surrounding the sale. Air Liquide listed and sold it just months after it swallowed Airgas in a $13.4 billion all cash deal that required Air Liquide to take on a mountain of debt.
Air Liquide only stated that it wanted to concentrate on its core business, but the €229 million it received for Aqualung must have been quite helpful for managing its new debt obligations while integrating Airgas into its operations. You noted in a post back then that they were originally asking for £400 million. The discount on such a storied part of Air Liquide's history suggests that the need for cash was acute.
As to the profitability of Aqua Lung before the sale, Air Liquide combined Aqua Lung and Air Liquide Welding into a single "Other Activities" category when reporting operating income, so I don't have the exact number. But they did report their earnings separately so we know that AL made up around a third of "Other Activities". With "Other Activities" showing a positive operating margin of 6.1% for both 2014 and 2015, and 5.4% for the first half of 2016, it's unlikely that Aqua Lung had an operating loss.
Indeed the sale of Air Liquide Welding to Lincoln Electric, which occurred a few months after the Aqua Lung sale, for only €115 million which was half of the sale price of Aqua Lung even though Welding had twice the revenue strongly suggests Aqua Lung was the more profitable business. It is also further evidence of Air Liquide's need for ready cash following the Airgas acquisition.
...or evidence it was over-valued.
From Darcy's article here:
So what we do know, is that at the start of this they were 100 million euros in debt. This was before they mortgaged Apeks for the 25 million at the end of 2023, and before I believe there was another large loan mentioned in this thread as well.
Just a few more data points to consider...
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