Paintball Mergers and Acquisitions

[Cusack]

The current stage of industry growth is for successful companies to acquire smaller companies, or to merge with others whose product gaps fill theirs and thus the company gains a greater market share and product spread.
Maybe some economists can shed more light on the less obvious advantages of this, but with the NPS PMI merger, the group now has a piece of every, if not almost every, pie. Procaps also owns draxxus / vforce / xball and Dye produces almost every product you could need.

My question is, what companies do you think would make the best match and how likely would that be? Who would you prefer to see? Who's left?


History / politics taken into account

 

[HERMITT]

Dye, Planet and Draxxus

 

[Robbo]

The current stage of industry growth is for successful companies to acquire smaller companies, or to merge with others whose product gaps fill theirs and thus the company gains a greater market share and product spread.
Maybe some economists can shed more light on the less obvious advantages of this, but with the NPS PMI merger, the group now has a piece of every, if not almost every, pie. Procaps also owns draxxus / vforce / xball and Dye produces almost every product you could need.

My question is, what companies do you think would make the best match and how likely would that be? Who would you prefer to see? Who's left?


History / politics taken into account

I think you are a little confused here Cusack, first off the major acquisitions haven't been done by successful paintball companies, they have been investment corporations who have come in after targeting paintball as an 'interesting' area.
These acquisitions have not been done to dovetail products as you imply but have been done to take advantage of a marketplace that has potential for major corporations.
K2 who bought out JT, Viewloader and WorrGames is an investment house (venture capitalists) as are the companies who took over ProCaps (Draxxus) from Richmond and the dual takeover of PMI and NPS.

The reason why PMI was bought out alongside NPS was to make sure the acquisition had its own paint producing facility which was gonna prove crucial in any buy out of this kind.


What's interesting is the fact that if you were to ask most paintball commercial analysts who they thought were the most successful companies, they would undoubtedly include Dye and Smart Parts, and these two are still privately owned.

They are not high volume / small margin interests and yet their last year's trading figures seem to imply that this is the way to go which flies in the face of these recent corporate takeovers who seem to be focusing on the mass market side of things.

I am not saying these companies aren't immune from takeover because everything has its price but I know Dave who owns Dye pretty as well as Billy and Adam who own Smart Parts and it may well be their passion for the sport that enables them to run such successful companies.
It just seems ironic to me that whilst these big investment companies buy out the mass marketing side of our industry, the real success stories are being left alone...... hmmmmm, I wonder why...

 

[Raffles]

And it's not just paintball that investment bankers buy in to.

Quite a few of the smaller telecoms companies have been swallowed up by these large organisations as well.

This actually makes it a lot worse for the consumer - as it lessens the competition - and creates cartels (queue a mention of the monopolies and mergers commission).

Imagine if WalMart bought Tesco, Sainsburys and Morrisons (who owns Morrsions now btw?). Then they would 'control' nearly every consumer if the UK. Frightening thought eh?

 

[Robbo]

And it's not just paintball that investment bankers buy in to.

No sh!t ... really???? ..... wow !

 

[Cusack]

No sh!t ... really???? ..... wow !

If i had a sig, that post would go in it


Robbo, I probably am confused - I didn't know they were ALL investment companies! It seems larger / more powerful companies see the sense in bringing smaller companies together, the sort of thing that happened on a world market scale with companies like GM, and now the people with money are doing it in our untapped market.

If the investment companies bought out Dye or SP, i would have thought the large price tag would take a while to be offset, they would be better off buying cheaper and waiting for the mainstream paintball boom (e.g when every aunt and uncle buys any kit they see for a christmas present) and those products will make some returns. Surely (without de-railing the thread ) these guys wanna spark the reaction that will make them lots of money?
Do you see any potential for sideways (i think) investment - inside paintball companies 'huddling together for warmth' maybe?

 

[dj_padd]

Imagine if WalMart bought Tesco, Sainsburys and Morrisons (who owns Morrsions now btw?). Then they would 'control' nearly every consumer if the UK. Frightening thought eh?

Morrisons is still family run with Sir Ken Morrison but they did buy out safeway

 

[Raffles]

No sh!t ... really???? ..... wow !

No, really, they do, honest .


dj_padd - thanks .

 

[jamtheman188]

Wal mart couldnt buy Tesco, Sainburys and Morrisons..not becuase they dont have the money to, which they dont anyway, but they wouldnt be allowed. The same reason why Tesco doesnt buy Sainsburys, becuase they are not allowed to as the consumer will not have enough choice as to where they want to buy their shopping.
As you say they could "control" nearly every consumer in the UK, well not really...but they could control the market prices..which is essentialy a form of market failure so the governent makes sure there is enough competition that market prices find their own price as it where.
Also why a cartel between any supermarket is completey illigal, becuase market prices will be set higher than they should be.

 

[Nick Brockdorff]

I think people are a bit confused about how investment companies work

Seldom do they actively search for businesses to aquire.

More often, they are contacted to help finance management buy outs, hostile or friendly takeovers, etc. - And even more than that, they finance new businesses as venture capitalists.

Also, they are often given a minor stake in a company, to help finance a new area of operation, an expansion, or something similar.

It is not like in the movies, where investment companies are always in it for the quick buck - by reorganising companies and selling them again. - Some companies actually invest with a long term strategy, to get a sustained and solid yearly return on investment, from the company they invest in.

I do not think it is a trend that financial companies take over paintball companies - I think each case has its own reasons and merits.

In the K2 case, it was a question of buying into a closely related industry, to what they were doing already, to further expand the brand that was already leading in its core market.

In the NPS/PMI case, it was a question of financing a takeover (as far as I am informed anyway).

In the case of SP and DYE, both being privately held companies, there is no way they can be taken over in a hostile way,and as long as the principal owners think they are making good business and are unwilling to sell, they will retain the current ownership.

Rather, I would assume they might both invite an investment company into the circle of owners, to finance takeover of the business areas they need - primarily soft gel encapsulating, but areas like plastics, electronics and large scale pneumatic manufacturing are also interesting.

However - I think - more than anything, that the trend for the future, will be companies investing in or starting companies in the far east (especially China, Malaysia and Taiwan), to move production to a low cost/high quality area.

Nick