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Sweetwater Music bought by a Private Equity Firm| Founder & CEO just stepped down, next GC?
Old 14th August 2021
  #1
Here for the gear
 
Sweetwater Music bought by a Private Equity Firm| Founder & CEO just stepped down, next GC?

Have to say this is super disappointing as someone that has sworn by SW for a long time now. Hopefully it doesn't become another Guitar Center PE story 5-10 years from now.

Local context: https://fortwayneworldpress.com/2021...ity-ownership/

Formal Press Release: https://www.provequity.com/news/prov...-in-sweetwater
Old 14th August 2021
  #2
Here for the gear
 
Update:

Response from Chuck (I reached out given the concern by many people on the reddit thread that started this, to Chuck's credit he responded in 25 mins which I never would've expected):

I am in a board meeting all day, so I don’t have a chance to read the reddit thread. That being said, I wanted to respond right away.

I am very excited for Sweetwater and our customers, as well as my family, and our community about this deal. Providence are truly great people. I understand the reputation that some PE firms have. These guys are one of the good ones. They love our culture, they love our people and they understand what makes us successful. The acquired us because they want to help us grow and get better. They do not want to cut anything. In fact, they are pushing us to grow faster.

Please understand my wife and I still own a huge amount of the business and I remain as a Chairman of the board. When I started this process it was important to me to find partners who valued the same things I did. After all, it was my “baby”. I wanted someone who would leave our business in Fort Wayne, who would respect our philosophies and our people and customers. I am confident that Providence meets every one of these pillars. Watch over the next few years and I am certain you will see Sweetwater only get stronger.
Old 14th August 2021 | Show parent
  #3
Gear Maniac
 
Quote:
Originally Posted by icouldbeyu ➡️
Update:

Response from Chuck (I reached out given the concern by many people on the reddit thread that started this, to Chuck's credit he responded in 25 mins which I never would've expected):

I am in a board meeting all day, so I don’t have a chance to read the reddit thread. That being said, I wanted to respond right away.

I am very excited for Sweetwater and our customers, as well as my family, and our community about this deal. Providence are truly great people. I understand the reputation that some PE firms have. These guys are one of the good ones. They love our culture, they love our people and they understand what makes us successful. The acquired us because they want to help us grow and get better. They do not want to cut anything. In fact, they are pushing us to grow faster.

Please understand my wife and I still own a huge amount of the business and I remain as a Chairman of the board. When I started this process it was important to me to find partners who valued the same things I did. After all, it was my “baby”. I wanted someone who would leave our business in Fort Wayne, who would respect our philosophies and our people and customers. I am confident that Providence meets every one of these pillars. Watch over the next few years and I am certain you will see Sweetwater only get stronger.
While I trust he has done his diligence, of course a private equity firm is encouraging him to grow. That's literally the entire point of what they do.

The cuts and the changes in business model come later.
Old 14th August 2021 | Show parent
  #4
SRS
Lives for gear
 
SRS's Avatar
 
🎧 15 years
Quote:
Originally Posted by Cuboctahedron ➡️
While I trust he has done his diligence, of course a private equity firm is encouraging him to grow. That's literally the entire point of what they do.

The cuts and the changes in business model come later.
Spoken with seeming experience.
Old 14th August 2021 | Show parent
  #5
Lives for gear
 
Papanate's Avatar
 
🎧 10 years
Quote:
Originally Posted by Cuboctahedron ➡️
While I trust he has done his diligence, of course a private equity firm is encouraging him to grow. That's literally the entire point of what they do.

The cuts and the changes in business model come later.
Naturally - later when Chuck has divested himself of the company. Oh Well - it was good while it lasted.
Old 15th August 2021
  #6
Gear Addict
 
Watch the e-mail promos to go from a couple times a week to three times a day.
Old 15th August 2021
  #7
Gear Guru
 
kennybro's Avatar
 
3 Reviews written
🎧 10 years
When I saw an ad for the "Sweetwater Music Store" (whatever that is), a few days ago, I smelled something like this coming down the road. Looks like they cobbled a retail outlet together as a test platform on the grounds of the Sweetwater campus first. I strongly suspect that there will be a "Sweetwater Music Store" in your neighborhood soon, competing with Guitar Center.
Old 15th August 2021
  #8
Lives for gear
 
🎧 10 years
The founder wanted an exit. He found a buyer, or the buyer found him.
Old 15th August 2021 | Show parent
  #9
Gear Guru
 
Brent Hahn's Avatar
 
1 Review written
🎧 15 years
Quote:
Originally Posted by kennybro ➡️
I strongly suspect that there will be a "Sweetwater Music Store" in your neighborhood soon, competing with Guitar Center.
Now that the sales tax loophole is finally gone, why not? Maybe brick and mortar is back.
Old 15th August 2021
  #10
Lives for gear
Doubtful on expanding via brick and mortar - overhead on a Guitar Center-style store is nuts and music shops face one of the worst 'can't have everything in store' dilemmas because the Internet has introduced people to so much niche/boutique/esoteric gear. If they're pushing expansion I would imagine it's about putting warehouses around the country to enable more one day shipping of online orders (I'm in the right time zone to average two days but New York and California are not).
Old 15th August 2021 | Show parent
  #11
Lives for gear
 
bgood's Avatar
Quote:
Originally Posted by gearstudent ➡️
The founder wanted an exit. He found a buyer, or the buyer found him.
Literally the opposite of what happened… but, go on, this is the Internet after all lol
Old 15th August 2021
  #12
Gear Maniac
Mitch?

Hope Mitch isn’t going anywhere? He’s such a great face for the company. Can’t imagine anyone being as well received as Mitch. Legend imo
Old 15th August 2021 | Show parent
  #13
Gear Head
 
Quote:
Originally Posted by Cuboctahedron ➡️
While I trust he has done his diligence, of course a private equity firm is encouraging him to grow. That's literally the entire point of what they do.

The cuts and the changes in business model come later.
The point of PE is to extract value from the company...either via growth, or chopping unprofitable stuff, or selling off pieces, etc.
The future of SW is of secondary concern to Providence's ROI.
Old 15th August 2021 | Show parent
  #14
Gear Maniac
 
Quote:
Originally Posted by sws1 ➡️
The point of PE is to extract value from the company...either via growth, or chopping unprofitable stuff, or selling off pieces, etc.
The future of SW is of secondary concern to Providence's ROI.
Yes — didn't mean to imply that growth was the only option, just the most common RoI strategy. Just ask the employees of Toys'R'Us about the alternatives...
Old 15th August 2021 | Show parent
  #15
Gear Nut
Quote:
Originally Posted by icouldbeyu ➡️
Update:

These guys are one of the good ones.
Nice
Old 15th August 2021
  #16
Lives for gear
 
iksrazal's Avatar
 
🎧 10 years
For things like analog synths and building lunchboxes, Sweetwater has been great as they may well have the largest catalog anywhere.

OTOH they don't do free shipping to Hawaii so I use Amazon when possible just for that reason. I shop more locally because of that too.
Old 15th August 2021 | Show parent
  #17
Gear Guru
 
kennybro's Avatar
 
3 Reviews written
🎧 10 years
Quote:
Originally Posted by wooderson ➡️
Doubtful on expanding via brick and mortar - overhead on a Guitar Center-style store is nuts and music shops face one of the worst 'can't have everything in store' dilemmas because the Internet has introduced people to so much niche/boutique/esoteric gear. If they're pushing expansion I would imagine it's about putting warehouses around the country to enable more one day shipping of online orders (I'm in the right time zone to average two days but New York and California are not).
Good points... but I suspect that the people who purchased have bigger plans. Warehouses would place inventory around the country; but what inventory? If they place enough inventory locally to be effective, what's the downside of putting a storefront right there also? Remember, a warehouse is essentially "brick and mortar."

In order to do warehouses, they would have to increase their on-hand inventory my many multiples. That runs counter to current retail business wisdom of less on-hand inventory, unless you are offering it for sale locally.

Plus, they have already established a test platform store on the SW campus. I see no other reason to do that, and advertise it as the "Sweetwater Store." Of course, they could decide it's a bad idea, but SW has already expended to its max in Indiana. Further expanding that campus would be pointless. People who buy a business want to be able to grow it and increase profits, or they look elsewhere.

Actually, I think it's a terrible idea. This sounds like a bunch of venture capitalists with big plans. Plenty of investors have gone bust because they tried to implement stupid ideas. I think it's a shame that they will probably eventually "gut-for-profit" a perfectly fine business that well-serves a lot of professionals. Can't blame Chuck S. He's probably had enough.
Old 15th August 2021
  #18
Lives for gear
 
loujudson's Avatar
 
2 Reviews written
🎧 10 years
WTF is "The Sweetwater Family of businesses"? First I have heard about that.

I'm glad I have grown out of gear acquisition. I have all I need for the rest of my long life. I actually need to divest a lot of stuff before I go!
Old 15th August 2021 | Show parent
  #19
Gear Addict
 
🎧 5 years
Take Outside Capital, Lose Ownership of Your Business

Quote:
Originally Posted by icouldbeyu ➡️
Update:

Response from Chuck (I reached out given the concern by many people on the reddit thread that started this, to Chuck's credit he responded in 25 mins which I never would've expected):

I am in a board meeting all day, so I don’t have a chance to read the reddit thread. That being said, I wanted to respond right away.

I am very excited for Sweetwater and our customers, as well as my family, and our community about this deal. Providence are truly great people. I understand the reputation that some PE firms have. These guys are one of the good ones. They love our culture, they love our people and they understand what makes us successful. The acquired us because they want to help us grow and get better. They do not want to cut anything. In fact, they are pushing us to grow faster.

Please understand my wife and I still own a huge amount of the business and I remain as a Chairman of the board. When I started this process it was important to me to find partners who valued the same things I did. After all, it was my “baby”. I wanted someone who would leave our business in Fort Wayne, who would respect our philosophies and our people and customers.
I am confident that Providence meets every one of these pillars. Watch over the next few years and I am certain you will see Sweetwater only get stronger.
Counting down the days until we need a Sweetwater replacement.
Old 15th August 2021
  #20
Lives for gear
 
loujudson's Avatar
 
2 Reviews written
🎧 10 years
This just showed up in an email. I guess it may be part of the Sweetwater Family of Companies... But to show an idiot using bad mic technique in the ad does not speak well for the classes.
https://www.sweetwater.com/lists/vie...0f3053b41f9b85
Old 15th August 2021
  #21
Gear Addict
 
I remember working for a camera store and learning that the camera bodies were sold at cost, but the profit was in accessories. Turns out, the cameras were more a form of capital/investment/commodity - bought in large quantities and warehoused. It's all a money game. Sweetwater probably treats gear the same way, getting tax writeoffs and such. And they've been hawking their credit services for a while now. They probably make more money on the interest from credit accounts than on Neumanns and Focusrites.
Old 15th August 2021
  #22
Gear Guru
 
kennybro's Avatar
 
3 Reviews written
🎧 10 years
Bottom line... for all of the fancy BS word smithing optics touting excitement for the customers and incredible growth opportunities, this is only about stuffing the pockets of a tiny group of people with cash. That's all these things are ever about. I've been through this same thing as an employee with a fortune 250 and a major university, and I'm sure that the current employees are... just... "Thrilled!"
Old 15th August 2021 | Show parent
  #23
Gear Guru
 
Brent Hahn's Avatar
 
1 Review written
🎧 15 years
Quote:
Originally Posted by kennybro ➡️
I've been through this same thing as an employee with a fortune 250 and a major university, and I'm sure that the current employees are... just... "Thrilled!"
Hey, the customer experience might even get better. By this time, we've all gotten pretty good at understanding a Filipino accent.
Old 15th August 2021 | Show parent
  #24
Lives for gear
Quote:
Originally Posted by kennybro ➡️
Bottom line... for all of the fancy BS word smithing optics touting excitement for the customers and incredible growth opportunities, this is only about stuffing the pockets of a tiny group of people with cash.
To be fair, that's what Sweetwater (like every other for-profit corporation) was about before the PE people entered the picture.
Old 15th August 2021
  #25
SRS
Lives for gear
 
SRS's Avatar
 
🎧 15 years
Don't worry. If it begins to fail or fails, there will be another "Sweetwater" to take its place.

I must admit, VK was a good go-to for pro gear for years, then SW stepped into the scene years ago and just took off on a large scale. Their business model was/has been quite good IMO as I have purchased my fair share from them and been satisfied pretty much every time. A tough record to match in this day and age.
Old 15th August 2021 | Show parent
  #26
Gear Guru
 
kennybro's Avatar
 
3 Reviews written
🎧 10 years
Quote:
Originally Posted by wooderson ➡️
To be fair, that's what Sweetwater (like every other for-profit corporation) was about before the PE people entered the picture.
Well... you will not get argument from me about that. I've had some really great service from them, but also a really nasty exchange over a very big purchase (10's of thousands), and a terrible installation SNAFU about four years ago. To be fair, it was resolved to satisfaction.

Also, I am vehemently at odds with Surack's politics (which actually personally, actively and vocally entered into the service and payment issue I was having with them), but that's me. But it curtails my desire to support the company. Again... that's just me.
Old 16th August 2021
  #27
Gear Nut
 
🎧 5 years
Yeah, I became disillusioned with SW when 6 months before the internet tax break ended, they went from trying to find me deals to trying to get me to commit to buying stuff at list that wasn't in stock yet. My sales rep there is a great guy and super knowledgeable but...

>>>, I am vehemently at odds with Surack's politics

This explains a lot. I asked my sales guy if Sweetwater could get on the BLM bandwagon and at least condemn all the stuff that was going down in Indiana. He wasn't very enthusiastic but said he'd pass it on...

Anyway, it was a great Era. SW had its time in the sun. Those looking for alternatives. On the east coast is Alto Music, fast shipping and a good deal occasionally.
Old 16th August 2021 | Show parent
  #28
Lives for gear
 
🎧 15 years
Quote:
Originally Posted by loujudson ➡️
WTF is "The Sweetwater Family of businesses"? First I have heard about that.
Besides the music company, there's the fairly large helicopter operation. Don't know if they've added rental planes too. And there's the luxury car dealership. Those are what I know of.
Old 16th August 2021 | Show parent
  #29
Gear Guru
 
Brent Hahn's Avatar
 
1 Review written
🎧 15 years
Quote:
Originally Posted by thenoodle ➡️
If Chuck stashes some large format stores (using the Mars music recipe or hey, Incredible Universe) in California within all the withering Sears store shells, I can see an in.
Hey, why not. Devote the whole second floor to studio furniture -- studio couches, studio dinette sets, studio Barcaloungers.
Old 16th August 2021
  #30
Gear Guru
 
Drumsound's Avatar
 
🎧 15 years
Quote:
Originally Posted by loujudson ➡️
WTF is "The Sweetwater Family of businesses"? First I have heard about that.

I'm glad I have grown out of gear acquisition. I have all I need for the rest of my long life. I actually need to divest a lot of stuff before I go!
https://www.sweetcars.com/

https://www.sweetaviation.com/

https://www.sweethelicopters.com/
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