L.A.B. Golf sold to private equity firm

[twholbrook]

Post is now deleted, interesting. Guessing a more formal announcement is coming shortly.

[QuigleyDU]

Just now, etodd said:

It seems the post has been removed from LAB RATS on facebook... I understand the negativity, but if Bill Presse comes out and says "The new owners are fantastic.", can't we just trust him for a minute until they prove us wrong? I know it's an unpopular opinion, but with the uptick in copies being released from other companies, this was the right time to sell before their sales tank as they wouldn't hold the majority of the market share.

The weird thing is I don't believe that. Bill currently has any ownership. lol. 

[etodd]

1 minute ago, QuigleyDU said:

The weird thing is I don't believe that. Bill currently has any ownership. lol. 

No clue on the specifics haha, but just as the "creator", the fact that he trusts in this sale is telling. Seems to be more positive than negative from his POV.

[dcmidnight]

5 minutes ago, etodd said:

It seems the post has been removed from LAB RATS on facebook... I understand the negativity, but if Bill Presse comes out and says "The new owners are fantastic.", can't we just trust him for a minute until they prove us wrong? I know it's an unpopular opinion, but with the uptick in copies being released from other companies, this was the right time to sell before their sales tank as they wouldn't hold the majority of the market share.

 

Ah, no. There very well may be a clause in their contract prohibiting disparaging remarks about the deal - or something along those lines. The idea that the guys who got paid are saying good things about the guys stroking the check?

 

Again I'm another guy who went through the s end of a PE deal so I dont look at it from any sort of bright side LOL.

[etodd]

Just now, dcmidnight said:

 

Ah, no. There very well may be a clause in their contract prohibiting disparaging remarks about the deal - or something along those lines. The idea that the guys who got paid are saying good things about the guys stroking the check?

 

Again I'm another guy who went through the s end of a PE deal so I dont look at it from any sort of bright side LOL.

I understand the public narrative. Support the guys who are paying us big $$$, etc. but I just think of Bill being more proud of his product than just trying to scheme for more cash. The fact that he went out of his way to address the big supporters of the brand, and then was recalled by corporate seems telling. But what do I know?

[jda]

Not that this matters to us normal schleps on the interwebs, but why does anybody assume that LAB is/was doing well and has tons of orders and raking in cash?  If this was true, then you don't need to sell a majority to anybody - you can just get a business loan, or sell PART of the company to a private investor or VC if they had a plan to make more money.  VCs absolutely LOVE to invest in companies that are doing well to expand - they love it.  You only go PE if you are in trouble.  This is the most likely scenario, even if it is really sad to some fanboys.  There is NO positive here.  Sorry.

[me05501]

Here's my theory on what the before/after might look like. 

 

I've long suspected L.A.B.'s strategy was to use "strategic scarcity" to maintain a very high price point. They were somehow able to supply PGA Superstore etc. with as many basic models as necessary while holding back customization for those who were willing to pay up and wait for delivery. 

 

The marketing story gave the impression that balancing each putter required hours of work by skilled craftsmen etc and so forth, which was meant to justify the long waits and big markups. In reality I think they wanted to play out the orders relatively slowly to keep the price point high. If they suddenly filled all the outstanding orders it would have caused the second-hand market to crater which would erode the comfort level of customers spending $700 for a new custom putter. 

 

The hype cycle for these is probably peaking now with Spaun's major win and relatively wide Tour adoption. The strategy worked and it's time to cash in. 

 

My guess is that P.E. will ramp up production and try to keep the price point as high as possible for as long as possible. Eventually the used market will sag. More people will be able to buy and try them at lower prices and they'll turn over much more quickly. The only reason to buy a new one will be very specific customization or a desire to have one that isn't all chipped up from use. 

 

 

Edited July 28 by me05501

[Lumberjack627]

Called and canceled part of my order at least. Will see how it goes for the df3 but I canceled the other putter no issues. 
lets hope I get it produced before the downhill fall. 

[jda]

27 minutes ago, etodd said:

I understand the public narrative. Support the guys who are paying us big $$$, etc. but I just think of Bill being more proud of his product than just trying to scheme for more cash. The fact that he went out of his way to address the big supporters of the brand, and then was recalled by corporate seems telling. But what do I know?

 

It means that he is no longer in control, was likely reprimanded and also very likely required to remove the post or be in breech.  Again, no positives here.  It is very likely that he will never be allowed to communicate again with everything going through the social media managers of the new owners.  There was likely a non-compete and non-disclosure that has a timeframe.  You might get some details after these are expired, but maybe not since lawsuits for slander do not have expiration dates.  There will be a coordinated "we are excited to announce" type of communication coning soon, or nothing.  The "excited to announce" means nothing, but no announcement means even worse things.

 

PLEASE listen to the folks who have been through this.  It is a very tight script that PE follows and there is rarely a deviation.

[lopey986]

1 hour ago, StoutKing said:

Now is the best time to buy IMO.  Before anything has the chance to go downhill

PE moves fast, QC will suffer instantly. I wouldn't buy anything from them from the moment the sale is official. 

[etodd]

2 minutes ago, jda said:

 

It means that he is no longer in control, was likely reprimanded and also very likely required to remove the post or be in breech.  Again, no positives here.  It is very likely that he will never be allowed to communicate again with everything going through the social media managers of the new owners.  There was likely a non-compete and non-disclosure that has a timeframe.  You might get some details after these are expired, but maybe not since lawsuits for slander do not have expiration dates.  There will be a coordinated "we are excited to announce" type of communication coning soon, or nothing.  The "excited to announce" means nothing, but no announcement means even worse things.

 

PLEASE listen to the folks who have been through this.  It is a very tight script that PE follows and there is rarely a deviation.

 

That's the thing, i'm not "not listening" to anyone. I'm just expressing how I personally see the situation. Do I think this could end very badly? Sure. Do I love LAB and want things to end very positively? Of course.

 

Just keeping some hope alive even if there's no reason to 👍 

 

Time will tell.

[Lumberjack627]

12 minutes ago, lopey986 said:

PE moves fast, QC will suffer instantly. I wouldn't buy anything from them from the moment the sale is official. 

Makes me want to cancel the whole order and just buy a used one. Even tho the used is not the color or sight lines I wanted. 

[wfrogge1]

I have worked for companies where a PE took over and things went bad fast and I have worked for companies where a PE took over and things got better. Currently I work for a company that has been owned by the same PE firm for 25+ years. They stay out of daily operations, no cuts/layoffs ever, and are really friendly when they visit. Why? Because we generate a lot of revenue for them and grow year after year. 

Titleist and TaylorMade over the years have been owned by PE firms with good results (outside of the issues with the TM full carbon heads but that has nothing to do with the PE firm). 

[gator022]

PE money is a mixed bag.  To lump it all in that they are all bad and LAB is going to crap is inaccurate.  If you're the sole owners of LAB and the demand is where it's at and to fulfill it and future demand you have to take out massive loans that may require personal guarantees, do you do that?  Or do you take on private investors to take on that risk.  The term PE can be so broad as it could be Blackrock, Berkshire, or 4-6 wealthy individuals/families that like golf and the financials.  My suspicion is for them to keep up with demand the amount of debt they'd have to take on to ramp up production is not the risk level they were comfortable with.  Also, sometimes PE money can come in and streamline some efficiencies and implement processes that individual owners can't or won't implement.

 

I suspect we'll hear something from Sam Hahn soon.  Seems to be a very transparent guy.

[Circaflex]

Well, there goes something good. PE is never a good thing.

[snagy2000]

32 minutes ago, Lumberjack627 said:

Makes me want to cancel the whole order and just buy a used one. Even tho the used is not the color or sight lines I wanted. 

Seems like you just want a reason to cancel your orders... 😂 

[snagy2000]

1 minute ago, Circaflex said:

Well, there goes something good. PE is never a good thing.

It is for the selling party!

[AlpineGolf]

15 minutes ago, gator022 said:

PE money is a mixed bag.  To lump it all in that they are all bad and LAB is going to crap is inaccurate.  If you're the sole owners of LAB and the demand is where it's at and to fulfill it and future demand you have to take out massive loans that may require personal guarantees, do you do that?  Or do you take on private investors to take on that risk.  The term PE can be so broad as it could be Blackrock, Berkshire, or 4-6 wealthy individuals/families that like golf and the financials.  My suspicion is for them to keep up with demand the amount of debt they'd have to take on to ramp up production is not the risk level they were comfortable with.  Also, sometimes PE money can come in and streamline some efficiencies and implement processes that individual owners can't or won't implement.

 

I suspect we'll hear something from Sam Hahn soon.  Seems to be a very transparent guy.

 

Private equity is often misunderstood, largely due to its many nuances and diverse approaches. It's difficult to pin down a single stereotype of a PE investor—there are numerous strategies and methods for creating value. While it's true that there are examples of PE deals that have had a negative impact from a consumer standpoint, it's worth remembering that strong PE returns ultimately benefit institutions like pension funds.

As for L Catterton, there are certainly far worse investors one could be dealing with. They have a solid track record in consumer investments, and I wouldn't be surprised if this deal includes a meaningful injection of primary equity rather than being dominated by a large secondary cash-out for the existing team. That said, it's fair to assume that the founders and key R&D personnel will be expected to roll a significant portion of their proceeds into the new structure anyways. Scaling a business requires deep pockets. 

[snagy2000]

Over the last month + there has already been talk from LAB stating they were improving their facilities and delivery time. Anyone who saw that communication shouldn't be surprised to hear about this transaction. 

[QuigleyDU]

8 minutes ago, snagy2000 said:

Over the last month + there has already been talk from LAB stating they were improving their facilities and delivery time. Anyone who saw that communication shouldn't be surprised to hear about this transaction. 

Their build and delivery time right now is pretty bad. They need to the help. lol. 

[CPT_LHR_ATL]

Catterton is a good shop and they understand premium brand equity very well, being part owned by LVMH (Louis Vuitton Moët Hennessy). If they are looking to get into golf, it makes perfect sense to pick a category leader like LAB. Last thing they will want to do is to take the company downmarket.

 

Also, as a 20-year growth PE guy, I'd just like to say that I am nourished by your hatred.

 

[Veebee3]

2 hours ago, jda said:

Not that this matters to us normal schleps on the interwebs, but why does anybody assume that LAB is/was doing well and has tons of orders and raking in cash?  If this was true, then you don't need to sell a majority to anybody - you can just get a business loan, or sell PART of the company to a private investor or VC if they had a plan to make more money.  VCs absolutely LOVE to invest in companies that are doing well to expand - they love it.  You only go PE if you are in trouble.  This is the most likely scenario, even if it is really sad to some fanboys.  There is NO positive here.  Sorry.

PE definitely does not only invest in struggling businesses. There is really not much difference between selling equity to a PE or a VC, a VC will just offer you less money. LAB definitely has a ton of orders but at the end of the day a boatload of cash is a boatload of cash. I do agree that it is unlikely PE ownership improves quality at all though. 

[Pnwpingi210]

1 minute ago, CPT_LHR_ATL said:

Catterton is a good shop and they understand premium brand equity very well, being part owned by LVMH (Louis Vuitton Moët Hennessy). If they are looking to get into golf, it makes perfect sense to pick a category leader like LAB. Last thing they will want to do is to take the company downmarket.

 

Also, as a 20-year growth PE guy, I'd just like to say that I am nourished by your hatred.

 

Do you know if we will start to get a LAB branded Patagonia vest  with each purchase now?

[tatertot]

2 hours ago, etodd said:

No clue on the specifics haha, but just as the "creator", the fact that he trusts in this sale is telling. Seems to be more positive than negative from his POV.

Well, he's not going to dis a company that paid him millions of dollars.

[QuigleyDU]

5 minutes ago, tatertot said:

Well, he's not going to dis a company that paid him millions of dollars.

 

Bill didn't get millions of dollars. Sam, maybe. But Bill? No.. 

[tatertot]

1 minute ago, QuigleyDU said:

 

Bill didn't get millions of dollars. Sam, maybe. But Bill? No.. 

Will he be employed by the new owners?

[QuigleyDU]

1 minute ago, tatertot said:

Will he be employed by the new owners?

No idea. 

[BubbaWon]

2 hours ago, jda said:

Not that this matters to us normal schleps on the interwebs, but why does anybody assume that LAB is/was doing well and has tons of orders and raking in cash?  If this was true, then you don't need to sell a majority to anybody - you can just get a business loan, or sell PART of the company to a private investor or VC if they had a plan to make more money.  VCs absolutely LOVE to invest in companies that are doing well to expand - they love it.  You only go PE if you are in trouble.  This is the most likely scenario, even if it is really sad to some fanboys.  There is NO positive here.  Sorry.

This isn’t true. VCs don’t love capex and opex heavy consumer businesses, and manufacturing putters in America is just that. 

 

This acquisition is certainly by a growth equity (a form of PE)….likely L Catterton. 

 

[Minarets]

13 minutes ago, QuigleyDU said:

No idea. 

his post said he had some kind of equity share I believe

[PNW]

All the people with torches cancelling their orders right now because they don't understand PE are going to be unhappy when they have to get to the back of the line again when they reorder. Good news is it should be a quicker line