Blue, Serotta join Mad Fiber at Divine Cycling Group

[Charles M]

Please see the attached press release for news regarding Serotta and Blue Competition Cycles joining Mad Fiber at Divine Cycling Group (DCG). You’ll recall that DCG acquired Mad Fiber in February of this year, as their first step in the process of building a multi-brand cycling company. Blue and Serotta have now become the next brands to join DCG through a merger as outlined in the release. The shareholders of Serotta and Blue are now shareholders in DCG, and will have board representation. Existing management teams for each brand will remain intact, and each brand will maintain its current manufacturing structure, as the goals of DCG are to build a business of strong, independent brands while appropriately seeking the benefits of scale that come from consolidation under DCG. DCG continues to pursue and consider additional merger and acquisition options within the cycling industry.




Serotta,!Blue!Competition Cycles!and!Mad!Fiber!Wheels!Consolidate!Under!Comm on!Ownership
NEW! YORK,! NY! (June! 19,! 2013)!5 The! owners! of! Serotta,! Blue!Competition!Cycles!(BCC)!and!Mad!
Fiber!Wheels! announced! today! that! the! three! companies! have! consolidated! under! Divine! Cycling!
Group,!Inc.!(DCG).!!
DCG! founder! Gary! Ullman! said! of! the! strategy! behind! the! merger,! “Collectively,! these! companies!
bring! together! manufacturing! expertise! across! materials! and! product! categories! and! extensive!
aerodynamics! expertise.! They! combine! American! manufacturing! knowledge! with! significant!
experience!operating!in!Taiwan!and!elsewhere!in!As ia.!The! three!businesses’! sales! forces!cover!all!
major!cycling!markets,!and!utilize!the!best!combin ations!of!traditional!distributors,!dedicated!sale s!
offices,!trading!partners!and!representatives.!And !they!are!now!brought!together!under!a!board!that!
has! world! class! experience! in! acquisition! and! strategic! integration! such! that! they! will! be! able! to!
better! attract! investment,! more! rapidly! grow! product! lines! and! profitability,! and! benefit! from!
combined!strengths!while!maintaining!individual!br and!identities!under! their!current!management!
teams.!This,!as!DCG!Inc!continues!its!commitment!t o!growth!through!acquisition!and!further!builds!
the!company.”!Each!company!will!maintain!its!curre nt!production!facilities.
Serotta,!founded!in!1972!by!industry!icon!Ben!Sero tta,!has!a!proud!history!of!completely!designing,!
engineering! and! producing! every! part! of! its! marquee! bicycle! frames! and! forks.!! ! While! the! main!
offerings! of! Serotta! have! been! and! continue! to! be! in! the! custom5bike! segment,! the! company!
recently! launched! several! standard! geometry! stock!models.! ! Serotta! crafts!titanium,! carbon! and!
titanium5carbon!bicycles.
Blue!Competition!Cycles!designs!and!builds!world5c lass!complete!bicycles!and!framesets!capable!of!
giving! elite! athletes!a! competitive! advantage,! but! which! are! also! available! to!amateur! athletes! or!
serious! enthusiasts.!Along! with! other! attributes,! BCC’s! bikes! are! known! for! their! ground5breaking!
aerodynamic!features,!developed!in!large!part!by!w ind5tunnel!expert!Mike!Giraud.!!BCC!is!headed!by!
CEO!Steven!Harad,!who!has!significant!industry!and !consolidation!experience.
Mad! Fiber, founded! by! one! of! the! industry’s! leading! wheel! experts,! Ric! Hjertberg,! and! Max!
Kismarton,!a!Senior!Fellow!at!Boeing,!has!replaced !the!traditional!wheel –!a!structure!comprised!of!
dozens! of! individual! parts! –! with! a! one5piece! tensioned! carbon! structure.! Applying! composites!
engineering! principles! from! the! aerospace! industry,! the! Mad! Fiber! team! has! built! an! amazingly!
strong,!aerodynamically!slick!and!incredibly!light !carbon!wheel!set!that!can!satisfy!the!needs!of!th e!
most!demanding!professional,!and!they!have!made!it !available!to!cycling!enthusiasts!the!world!over.
DCG! was! formed! in! 2012! with! the! singular! goal! of! consolidating! cycling! and! other! sport! or!
recreation5focused!companies!that!have!strong!indi vidual!brands!and!which!offer!products!that!are!
well5regarded! within! their! respective! industry! segments.! ! As! a! result! of! the! transaction,! BCC! and!
Serotta!shareholders!will!become!shareholders!in!D CG!and!be!represented!on!the!Board!of!DCG.
The!terms!of!the!deal!were!not!disclosed.

[rice rocket]

Whoaaaaaa.

[AngryScientist]

as a huge Serotta fan, i gotta say: I cant handle this management/financial roller coaster ride they are on. yeessh.

[William]

The wheels, they are ah turnin'! :)





William

[FlashUNC]

This mean that we might be seeing steel Serottas again in the fairly near future?

Or all Serottas will come from the factory with MadFibers?

Not completely surprising -- though would be very interested to get RustyLion's perspective on this one.

[false_Aest]

that's a whole lotta ! and $$ yo

[bobswire]

I normally don't comment about Serotta or other cycling companies but I'm totally baffled by some of Bens moves and what he/Serotta is thinking or seeking ?
RS,Strong, Della Santa are easy to understand and their place in the market but Serotta is baffling, however by all account they still make a great frame.

[BumbleBeeDave]

. . . to speculate on anything at this point. Bill checks in here farily often and I'm sure he will jump in with some further info.

In the meantime, Charles sure does sem excited about this . . . Look!at!all!those!exclamation!marks!!!!!!!!!!!! :rolleyes: :p

BBD

[54ny77]

Coming to a cereal bowl near you: Madfibrulotta.

[nm87710]

The Titanic probably had a better chance of staying afloat than this venture on it's current course.

[MattTuck]

There are a lot of exclamation points in there.

http://www.youtube.com/watch?v=3rd7j-aSqFU

[Z3c]

I really don't see any synergies developing amongst 3 brands that have no traction independently. I see 3 adopted kids each with their own sucking chest wound; hopefully Dad is a surgeon. I'm sure trying to eek out some economies from the carbon facility is high on the list of aspirations(pun intended).

Wave goodbye to the Serotta brand you knew boys, she just sailed over the horizon.. Don't be sad, just buy a Hampsten instead.

[eddief]

i just need a little more time to think of something crappy to say.

but maybe it means that Serotta will use the overseas manufacturing experience to have built gorgeous ti in the East. Maybe steels too.

[zap]

Can't read through the !!!!!! that Charles posted.

This might be key......from Bicycle Retailer.

They combine American manufacturing knowledge with significant experience operating in Taiwan and elsewhere in Asia.

Time will tell. Smart folks can improve brand(s).

[charliedid]

Not surprised at all by this.

[Len J]

I'm curious as to what the strategic motivation was.

Len

[old fat man]

I was just speaking with someone close to the new $ people backing Serotta.

http://bradwayfinancial.com/about-us/brian-case/

They have hands in bikereg.com and a western MA fitting studio/shop too.

[MattTuck]

I'm curious as to what the strategic motivation was.

Len

Yeah, the real disconnect that I see (and I wish Serotta well in doing it) is the difference between craft and authentic performance. Many people who buy custom are looking for the connection to a builder. Serotta may have had that in the past, but through various private equity deals, manufacturing on both coasts, etc. there really isn't much connection to the builder.

They can still focus on authentic performance, and I think that this DCG is trying to do just that. I'm not sure it will resonate with consumers. I am not sure they can bring a compelling product to the market at a price point that will sell. In the long run, if they're not focusing on the connection to the artisan/craftsman, then they need to find a way to do R&D at a competitive scale with Trek/Specialized/etc. and the way you do that is to build scale.

[soulspinner]

Coming to a cereal bowl near you: Madfibrulotta.

Need all the fiber I can get:p

[dekindy]

I wish we could make up our minds about Serotta!:rolleyes:

[EDS]

Yeah, the real disconnect that I see (and I wish Serotta well in doing it) is the difference between craft and authentic performance. Many people who buy custom are looking for the connection to a builder. Serotta may have had that in the past, but through various private equity deals, manufacturing on both coasts, etc. there really isn't much connection to the builder.

They can still focus on authentic performance, and I think that this DCG is trying to do just that. I'm not sure it will resonate with consumers. I am not sure they can bring a compelling product to the market at a price point that will sell. In the long run, if they're not focusing on the connection to the artisan/craftsman, then they need to find a way to do R&D at a competitive scale with Trek/Specialized/etc. and the way you do that is to build scale.

What does "authentic performance" mean?

[54ny77]

i think that's where one seamlessly productizes scalable quality vectors.

http://www.atrixnet.com/bs-generator.html


What does "authentic performance" mean?

[MattTuck]

What does "authentic performance" mean?

High end, light, race worthy designs. Teams riding in big events on your bikes.


I was trying to draw a distinction in what people will pay premium money for. Some will pay for for hand crafted, artisan made bikes. Connection to the builder. Scarcity.

Absent that stuff (and I think it is absent in Serotta's case), you need to differentiate on performance and having your bikes at a high level of the sport.

[reggiebaseball]

this is the money game.

Serotta "partnered" with a capital company in 2012

That means Ben needed money and a bunch of hedge fund guys decided it was nice to play with bicycle companies in 2012. Nothing was gonna change then, it was only going to improve the Brand, right?

Immediately new ownership steps in a lots of "plans," these look and sound good on paper, justify someones salary, but don;t have to really be undertaken.... because.....

About a year later, like most investment entities, they decide to cash out or "grow" by merging with more like entities.

This will only get worse, and is quite like the restaurant owner going into cahoots with the local mob boss in Goodfellas.

From the film Goodfellas describing a "merger" with Paulie the "consolidation specialist"

But now Ben's gotta come up with DCS's money every week, no matter what.
Business bad? "F$%k you, pay me."
Oh, you have low demand for Ti? "F&^k you, pay me."
Designing the new carbon rear end costs money, huh? "F%$k you, pay me."

The news brief, if honest, would read a bit more like this:

By merging these companies we will be able to trim our staff, reduce benefits across the board, and generally cut costs to "boost" short term profits and revenue. That is what a "consolidation specialist" does to justify taking tons of salary money out of the coffers of your favorite brand.

A bunch of capitalist hedge fund managers will be able to micro manage the operations and streamline them for short term revenue production.

In less than two years, once most of the core staff of these companies are gone and they are little more than brand entity shells we will begin outsourcing products to several third world nations to provide nearly the same product, but at much better prices.

Like Apple, we will be a premier "Designed in America" brand entity. We are already softening you to this idea by referencing our " significant experience operating in Taiwan and elsewhere in Asia."

Or we may just sell or merge with something else in 2014- stand by for the PR Newswire release





Funny, when I made the same warning and predictions last year in the thread about the awesome "partnership" with the last round of capital partners people wanted to remain optimistic and wait and see how it evolved. Have you seen enough yet?

[flydhest]

Can't read through the !!!!!! that Charles posted.


. . . I actually ended up copying and pasting into Word and then did a global search and replace of "!" with " "

[BumbleBeeDave]

Reggie, I don't see your "quote" in any of the previous posts? . . . :confused:

BBD

[reggiebaseball]

sorry, it was a quote from Goodfellas, which I referenced in the line prior to the quote,

is it more clear now?

[slidey]

Serotta, Blue Competition Cycles and Mad Fiber Wheels Consolidate Under Comm on Ownership
NEW YORK, NY (June 19, 2013) The owners of Serotta, Blue Competition Cycles (BCC) and Mad
Fiber Wheels announced today that the three companies have consolidated under Divine Cycling
Group, Inc. (DCG).
DCG founder Gary Ullman said of the strategy behind the merger, “Collectively, these companies
bring together manufacturing expertise across materials and product categories and extensive
aerodynamics expertise. They combine American manufacturing knowledge with significant
experience operating in Taiwan and elsewhere in Asia. The three businesses’ sales forces cover all
major cycling markets, and utilize the best combinations of traditional distributors, dedicated sales
offices, trading partners and representatives. And they are now brought together under a board that
has world class experience in acquisition and strategic integration such that they will be able to
better attract investment, more rapidly grow product lines and profitability, and benefit from
combined strengths while maintaining individual brand identities under their current management
teams. This, as DCG Inc continues its commitment to growth through acquisition and further builds
the company.” Each company will maintain its current production facilities.
Serotta, founded in 1972 by industry icon Ben Serotta, has a proud history of completely designing,
engineering and producing every part of its marquee bicycle frames and forks. While the main
offerings of Serotta have been and continue to be in the custom bike segment, the company
recently launched several standard geometry stock models. Serotta crafts titanium, carbon and titanium carbon bicycles.
Blue Competition Cycles designs and builds world class complete bicycles and framesets capable of
giving elite athletes a competitive advantage, but which are also available to amateur athletes or
serious enthusiasts. Along with other attributes, BCC’s bikes are known for their ground breaking
aerodynamic features, developed in large part by w indtunnel expert Mike Giraud. BCC is headed by
CEO Steven Harad, who has significant industry and consolidation experience.
Mad Fiber, founded by one of the industry’s leading wheel experts, Ric Hjertberg, and Max
Kismarton, a Senior Fellow at Boeing, has replaced the traditional wheel – a structure comprised of
dozens of individual parts – with a one piece tensioned carbon structure. Applying composites
engineering principles from the aerospace industry, the Mad Fiber team has built an amazingly
strong, aerodynamically slick and incredibly light carbon wheel set that can satisfy the needs of the
most demanding professional, and they have made it available to cycling enthusiasts the world over.
DCG was formed in 2012 with the singular goal of consolidating cycling and other sport or
recreationfocused companies that have strong individual brands and which offer products that are
well regarded within their respective industry segments. As a result of the transaction, BCC and
Serotta shareholders will become shareholders in DCG and be represented on the Board of DCG.
The terms of the deal were not disclosed.

[4Rings6Stars]

nevermind.

[johnniecakes]

I am trying so hard to care, but I just don't. With so many excellent bikes being made that I can purchase to less money Serotta is just blip anymore.

[BumbleBeeDave]

sorry, it was a quote from Goodfellas, which I referenced in the line prior to the quote,

is it more clear now?

I'm not a big movie guy.

BBD

[jmoore]

I saw a ti Serotta at White Rock Lake yesterday evening.


true story

[William]

Good? Bad? I don't know? It will be interesting to see how the cards play out. http://pidgin-themes.org/themes/smileys/Hyves%20Kwekker/Hyves%20Kwekker/smiley_poker.gif





William

[Z3c]

I'm curious as to what the strategic motivation was.

Len

Make money maybe? This isn't some romantic attempt to preserve the name; Serotta as some of you like to think of it is done.. I will be surprised if Ben is involved 2 years from now.. My guess is that Ben has been bled dry by these last few years and is scrambling to try and figure out how to afford retirement. Serotta=Masi is where this is headed if I were betting..

If think Ottrot's sell cheaply on Ebay now, just wait..

[Len J]

Make money maybe? This isn't some romantic attempt to preserve the name; Serotta as some of you like to think of it is done.. I will be surprised if Ben is involved 2 years from now.. My guess is that Ben has been bled dry by these last few years and is scrambling to try and figure out how to afford retirement. Serotta=Masi is where this is headed if I were betting..

If think Ottrot's sell cheaply on Ebay now, just wait..

By strategy I meant the how. Of course their goal is to make money but the underlying question is how do they expect to do that better this way.

Len

[reggiebaseball]

By strategy I meant the how. Of course their goal is to make money but the underlying question is how do they expect to do that better this way.

Len

They already say how in their announcement.
They are going to outsource production (certainly carbon) to Taiwan.

Nothing from this point forward (or perhaps even for the past year) has been done to make anything "better" it is now about making things more efficient, profitable, and cheaper to produce.

And I am quite sure poor Ben is falling down the rabbit hole. Maybe, just maybe he actually believed last years "partnership" would preserve his brand, but certainly now he realizes it is all down the drain and out of his control. I assure you it was not his dream to merge with Blue and make Meivici's in taiwan in 2016.

[Len J]

They already say how in their announcement.
They are going to outsource production (certainly carbon) to Taiwan.

Nothing from this point forward (or perhaps even for the past year) has been done to make anything "better" it is now about making things more efficient, profitable, and cheaper to produce.

And I am quite sure poor Ben is falling down the rabbit hole. Maybe, just maybe he actually believed last years "partnership" would preserve his brand, but certainly now he realizes it is all down the drain and out of his control. I assure you it was not his dream to merge with Blue and make Meivici's in taiwan in 2016.

I don't think that's what it says.

Len

[Mr. Squirrel]

I wish we could make up our minds about Serotta!:rolleyes:


it is hard to do when they keep jumping around like...me. nuk nuk nuk!

mr. squirrel

[sg8357]

Advice to Mr. Serotta, EJECT EJECT.
Sign the idiot non-compete agreement, then in two years give
Richard Schwinn or the Lynskey's a call, both experts at resurrection.

Saratoga Cycles, coming in 2016.

[572cv]

I'm with those who will wait for Bill to speak to this.

A few thoughts.
- there has been a general sense (on this forum at least) that Serotta has been making a lot of good moves of late. Who is to say, without further info, that this is not one of them?
- it is not the case that every venture capital group has a rip off attitude. There are a number of them in the north east with community improvement mission statements. I know of one which maintained its investment in a local firm for a decade, and then sold it in such a way as to maintain the employment locally and keep the business vibrant. Some VCs play hard AND play fair.

That this means a change for Serotta is true. At the least, the adjustment to a new business structure will take effort. But if they compete in that new structure as they are capable, I think, they will soon assume a leadership role there and all will go well. They can build forks and tubes for the whole organization. There is too much knowledge and skill not to see success.

I hope they go for it.

[54ny77]

the heart and soul of a company can never leave, right?

http://1.bp.blogspot.com/_O6BQab9ZREQ/S2piplri0KI/AAAAAAAABXk/mIMSmKmr-M8/s320/GeorgeZimmer.jpg

http://money.cnn.com/2013/06/19/news/companies/mens-wearhouse-zimmer/

[reggiebaseball]

I don't think that's what it says.

Len

well, reading comprehension is a skill that requires practice, like anything else.

If you read enough of these press releases you will be able to decipher them more readily. They are nearly identical regardless of the industry.

Here is an example of a Chinese Meat producer who just acquired Smithfield Foods in a $7billion merger.
http://finance.yahoo.com/news/shuanghui-international-smithfield-foods-agree-113000649.html;_ylt=AjfNTEslsV2S9iCXv56nGh2G4YdG;_ ylu=X3oDMTNtYmlxZXBvBG1pdAMEcGtnAzQ0OWQ1MzlmLWEzNW EtMzdkOS05MjA5LTM5ZjM5YTUxYzM5NQRwb3MDMTQEc2VjA2xu X1ByZXNzUmVsZWFzZXNfZ2FsBHZlcgNlMjQ4Zjg5MC1jODUzLT ExZTItYjY3My1iMTVjM2YzMDA5MWU-;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3

Or you can pick any other press release from the past 3 years involving investment or hedge funds, or overseas Asian producers and USA branded entities.

[Len J]

well, reading comprehension is a skill that requires practice, like anything else.

If you read enough of these press releases you will be able to decipher them more readily. They are nearly identical regardless of the industry.

Here is an example of a Chinese Meat producer who just acquired Smithfield Foods in a $7billion merger.
http://finance.yahoo.com/news/shuanghui-international-smithfield-foods-agree-113000649.html;_ylt=AjfNTEslsV2S9iCXv56nGh2G4YdG;_ ylu=X3oDMTNtYmlxZXBvBG1pdAMEcGtnAzQ0OWQ1MzlmLWEzNW EtMzdkOS05MjA5LTM5ZjM5YTUxYzM5NQRwb3MDMTQEc2VjA2xu X1ByZXNzUmVsZWFzZXNfZ2FsBHZlcgNlMjQ4Zjg5MC1jODUzLT ExZTItYjY3My1iMTVjM2YzMDA5MWU-;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3

Or you can pick any other press release from the past 3 years involving investment or hedge funds, or overseas Asian producers and USA branded entities.

I have no problem w reading comprehension. I've written more than a few of these.

I think you are seeing what you expect to see, not necessarily what is there.

Time will tell.

Len

[54ny77]

what nobody knows is the time horizon of investment and where things are in accordance with their biz plan. nor should we know--that's private. competitors would love to know, of course. it's not our or anybody's "right" to know the terms of their arrangement. if you want to know, invest in the biz. until then....

casting a "hedge funds are evil" swipe is a generalization. the pocket of money involved here may be long term private equity. maybe it's a 5 year commitment, maybe longer. there is a difference. i know plenty of firms that make multi-year investments. no press releases there.

and fer ceryin' out loud the financial deal was just done what, a year ago? so far they've come out with pronto & fondo, both nice bikes and priced competitively, re-did that godawful website, are making a concerted effort to re-brand and get out there, yadda yadda.

news of their death is greatly exaggerated. i see on local roads what they're putting out, and man oh man is it nice. you just never see that kind of info on the web. i would venture a guess that a great many of serotta's customers spend little to zero time on bike forums, and depend on the expertise of their lbs.

[cmg]

so Serotta is soon to become a decal i can buy on eBay.............

[reggiebaseball]

Len,

I just told you, but if you want to wait for "time" to confirm it, by all means.





54ny77-

I am afraid that the more nuanced your understanding of both private equity and the financial world in general, the more you will come to realize that "hedge funds are evil" is a certainty and not an exaggeration.

In the abstract, a hedge fund (like an individual human) is an inherently selfish and destructive entity, that unless regulated will seek short term pleasure to the long term destruction of it's environment and consumption of it's resources.

There will be no good that comes of this in my mind.

Perhaps some will find good you mean in buying a cheaper, American designed but foreign-made, version of the Serotta brand you once admired. Do you feel that you want a Masi now because they are now cheaper from Taiwan?

The existing USA workforce that once was Serotta will slowly be wittled down, laid off, consolidated, and given "retirement and severance" until there will be a skeleton crew drawing USA salaries. Before this happens they will get to meet with "the Bobs" from corporate, defend their existence, justify their employment, etc.

They will receive new "employee benefits manuals" that will include fine print that reduces the amount of potential severance or retirement benefits that they will receive.

These "savings" will bolster company profits, which will be gobbled by their new corporate masters and their investors.


If you find one actual middle class (or upper class but not CEO class) person you know that has been positively impacted by any such merger and I am all ears. I personally know about 300 people in 28 industries who have unilaterally been negatively impacted.

Now maybe if my friends were hedge fund managers or Chinese industrialists, I would have more positive intel for you.

[BumbleBeeDave]

I think you are seeing what you expect to see, not necessarily what is there.

Yeah. :rolleyes:

BBD

[SpokeValley]

Dos centavos.

It's certainly an interesting development.

If you look at DCG's website under "About Us" it says:

"The Divine Cycling Group (DCG) was formed with the singular goal of offering the highest quality products to a full range of cyclists - from beginner to expert, from existing to new.

DCG will achieve that vision by acquiring and consolidating manufacturing companies which currently offer products that are well regarded within the bicycle industry, but which may have lacked the scale and resources necessary to get those products to more cyclists worldwide."

First think I pick up is "...singular goal...", then "...quality products to a full range of cyclists..." How in the world do custom bikes in any material relate to a "full range of cyclists"?

Then, the big word "consolidating". Uh, oh.

Then look at their investment criteria.

I don't know nuthin' about nuthin', but that kind of talk says larger scale and broader markets.

As several here have said, time will tell.

Something tells me that this will turn out better for the independent frame builders than for BlueSerotta...hey, that's BS!:)

[rnhood]

Something tells me that this will turn out better for the independent frame builders than for BlueSerotta...hey, that's BS!:)


I think you meant; MadBlueSerotta. :)

[William]

Dos centavos.



Something tells me that this will turn out better for the independent frame builders than for BlueSerotta...hey, that's BS!:)

Have you been talking to Blue Horseshoe? I hear BHS loves....;)





William

[Kirk Pacenti]

"...companies which currently offer products that are well regarded within the bicycle industry, but which may have lacked the scale and resources necessary to get those products to more cyclists worldwide."

I'm game, where do I sign up?

[victoryfactory]

I have to believe this is what Mr Serotta wants. What others want
or expect from him really doesn't matter. He's done it all in the bicycle
business.

Maybe pre-merger Serottas will become collectors items?
Sort of like pre CBS Fender guitars...

VF

[54ny77]

my understanding is reasonably nuanced, and i will respectfully offer there are two sides to that operating platform you characterize with your own philosophical interpretation. i know and deal with quite a few folks who operate under that umbrella structure and who have built businesses entirely from scratch (or rescued existing operations from oblivion or self-destruction) that employ in aggregate many thousands of people. long term track record is their key to success (and compensation).

conversely, and more to your point, some are short term oriented and cast an otherwise darker cloud on the industry in general.

anyway, blah blah blah.....this is bicycles we're talking about. it's not about clubbing baby seals or saving the world. brands will come, brands will go. if they make it, great. if not, oh well. life will, shockingly, go on.



54ny77-

I am afraid that the more nuanced your understanding of both private equity and the financial world in general, the more you will come to realize that "hedge funds are evil" is a certainty and not an exaggeration.

[zap]

The existing USA workforce that once was Serotta will slowly be wittled down, laid off, consolidated, and given "retirement and severance" until there will be a skeleton crew drawing USA salaries. Before this happens they will get to meet with "the Bobs" from corporate, defend their existence, justify their employment, etc.



This is pretty funny.

I have a sneaky suspicion that with "evil" comes salaries.

Again, just a hunch ;)

[old fat man]

I have to believe this is what Mr Serotta wants. What others want
or expect from him really doesn't matter. He's done it all in the bicycle
business.

Maybe pre-merger Serottas will become collectors items?
Sort of like pre CBS Fender guitars...

VF

i bet he wants someone, anyone, to buy him out. make him a good offer for the business he's built and let him be a salaried employee, no longer bearing the brunt of running the business. if he doesn't sell out, what does he get for his years of work?

[4Rings6Stars]

i bet he wants someone, anyone, to buy him out. make him a good offer for the business he's built and let him be a salaried employee, no longer bearing the brunt of running the business. if he doesn't sell out, what does he get for his years of work?

Didn't he already do that?

[zap]

Didn't he already do that?

More than once.

[reggiebaseball]

This is pretty funny.

I have a sneaky suspicion that with "evil" comes salaries.

Again, just a hunch ;)

Right,
the cycling geniuses at DivineCycles, who have been involved with the industry for almost 5 (FIVE!!!) months - over 150 days, since making their money in mergers of packaging and biotechnology firms. Dont worry, they see being "young" to the industry as an "asset". They can manage these cycling companies just like a packaging firm- isn;t that awesome?

they (Divine) will indeed be drawing nice salaries and administrative fees for their hands-on management. "DCG is not a passive investor" they tell us on their Criteria page.

Meanwhile, anyone who drew a paycheck from Serotta last month other than senior management, they better be brushing up their resumes and hitting up their industry contacts.

HOWEVER,
If you currently make 6 cents an hour slaving out carbon fibre in Taiwan, REJOICE - yet another US firm is lining up to continue your gainful and most excellent employment. Prepare for 18 hour shifts rather than 16, and an extra 12 cents a day.

[zetroc]

Lots of knees jerking in here. I want a Pronto pretty badly, and will wait and see if the investors screw it up before condemning them, thank you very much. And if they don't screw up and everything turns up roses, so much the better.

[William]

There are a number of possible outcomes from this merger. Only time will tell whether it will be a positive or not. In the meantime we're all just speculating what this means.....unless anyone has some real inside information they would like to share.:)





William

PS: The rodent always seems to have some inside info.....~oh Mr. Rodent!!!~

[fuzzalow]

I don't follow the trials and tribulations of Serotta all that closely so I am going off of what is contained in this thread. To me, it looks like a middle game at best and and end game at worst. Either case, it is IMO the end of Serotta as we once knew it.

Mid game scenario says that they will have a go at forging a more upper tier brand carbon bicycle than the mass market Spec/Trek/Dale brand offerings. But they will no longer seek to compete in the titanium frame market - they start at a deficit and have too much to catch up to out-Moot Moots, IndyFab or Seven. Outsourcing to foreign carbon manufacturing, molded, not tubes & lugs. Trading on the brand & name recognition as a hallowed, halcyon entity with roots in American cycling.

End game scenario says they DBG are aggregating, packaging and window dressing assets to obfuscate and homogenize weakness in the asset structure and business model offering to make for a more viable sale which can then be strip mined and cherry picked for best ROI turnover, with the carrion assets discarded to the wayside.

Debate about the conscientiousness or rapaciousness of hedge and capital management all you wish, the inescapable conclusion is that there will always be a day of reckoning.

[nightfend]

Not just Serotta...

I was actually pretty impressed by the Mad Fiber wheels I've seen on peoples bikes. They seem well made and far sturdier than I originally imagined. Not to mention super lightweight.

BUT, there is no way I want to ride the second generation chinese manufactured versions of these wheels. Too many corners will be cut to save money in production.

Also, Blue has been selling chinese carbon frames for years now. So for them, nothing will change.

On Serotta's end, my guess is the first thing that gets outsourced is the carbon forks.

[2LeftCleats]

I have no opinion about the acquisition of the 3 companies, but I do have a stupid question.

In the years I've ventured onto this forum, I've heard of Mad Fiber and, of course Serotta, but don't recall anyone talking about Blue cycles. Reading their website doesn't enlighten me much about their company. They do not appear to do custom bikes. What if anything, makes them special? Anyone here own them?

[palincss]

Yeah, the real disconnect that I see (and I wish Serotta well in doing it) is the difference between craft and authentic performance. Many people who buy custom are looking for the connection to a builder. Serotta may have had that in the past, but through various private equity deals, manufacturing on both coasts, etc. there really isn't much connection to the builder.



Is there more of that connection with Seven? Personally I do not think so. And yet, Seven seems to be thriving, and I'm seeing a bit of a custom Titanium renaissance among the folks I ride with.

Equity deals? Customers know nothing of that.

[verticaldoug]

2LeftCleats

Blue is strong in the Tri community.

As for all the speculation, I think people are spending too much time watching CNBC.

Aggregating small niche businesses is a bit different than a larger business. This is less a hedgefund and more of a family office/private equity long term business plan.

What's the plan? Don't know
Will it work? Don't know

I also assume from the press release most production bikes will be made in Taiwan. The high-end stuff can stay in the States. Parlee already does this and they seem to be doing fine.

Between Serotta and Mad Fiber, they will have some serious carbon expertise.

However, on a more important note, I think the bikes Serotta has been turning out lately kick ass. Since this is an evolution of that process, I happily give them the benefit of the doubt.

[Climb01742]

Since we're all just spitballing it, I'll play too...

Well capitalized companies rarely sell themselves; they buy.

Under capitalized companies sell themselves. However sound their plans may or may not be, serotta faces a long road ahead. Long roads require capital, lots of it.

Being under capitalized is a fate many smaller businesses experience. Burn rates can kill you as you await that corner you need to turn. Lots of great ideas, people and companies have gone under under capitalized.

My two cents is...follow the money. Someone had money. Serotta needs it.

[beeatnik]

With this "merger," these guys (the money men) are buying brands (scalable intellectual capital) and not organizations. They're buying the Serotta brand, Madfiber's intellectual property and Blue's client list. Which means they're not interested in the human resources at these firms. Honestly, unless you're a CA Web 2.0 start up with 5 employees, who puts millions into firms who employ fairly compensated artisans. The 6 guys who work at MadFiber and the 15 hourly workers at Serotta do not a company make...to the VCs, that is.

[rain dogs]

Divine Cycling Group - Bike Propagation!

Bike... Propagation...???

... has a nice ring to it :rolleyes: (ugh)

where is the ugh or cringe smiley?

[Bikerist]

I wonder if RustyLion mentioned this to his peers at Ballers?

They seemed pretty impressed with what he had to say.

[e-RICHIE]

I wonder if RustyLion mentioned this to his peers at Ballers?

They seemed pretty impressed with what he had to say.


Shhhh...
What happens at Ballers stays at Ballers atmo.

[pbarry]

Right,
the cycling geniuses at DivineCycles, who have been involved with the industry for almost 5 (FIVE!!!) months - over 150 days, since making their money in mergers of packaging and biotechnology firms. Dont worry, they see being "young" to the industry as an "asset". They can manage these cycling companies just like a packaging firm- isn;t that awesome?

they (Divine) will indeed be drawing nice salaries and administrative fees for their hands-on management. "DCG is not a passive investor" they tell us on their Criteria page.

Meanwhile, anyone who drew a paycheck from Serotta last month other than senior management, they better be brushing up their resumes and hitting up their industry contacts.

HOWEVER,
If you currently make 6 cents an hour slaving out carbon fibre in Taiwan, REJOICE - yet another US firm is lining up to continue your gainful and most excellent employment. Prepare for 18 hour shifts rather than 16, and an extra 12 cents a day.

Unfortunately, this is the likely scenario. Hoping to be wrong.

[jr59]

Unfortunately, this is the likely scenario. Hoping to be wrong.

But they will be built to the exacting standards set forth and supervised by......

We have heard it all before! It's really a shame.

[1centaur]

If I'm guessing, and I am, what Serotta lacks is distribution. Maybe DCG wants to offer the gamut from low to high end to LBSs that feel they might need Spesh or Trek to compete and don't want to work it with one brand at a time but now can take a menu from DCG. That does not preclude Serotta being Serotta as long as lower end Asian carbon comes from someone else (Blue and names to come). A stable of artisan companies can succeed under an umbrella if the right people are at the top. Nothing Bill has said here suggested he was about to throw in the towel, so unless the rug was completely pulled out from under him, this deal fits with the stuff he's been working on.

[HenryA]

^+1^

[pbarry]

Three words: American Bicycle Group. One well regarded brand gone early after the consolidation/acquisition, the second was reduced to a feeble player in their target market, and the third, well, it's there in name only.

[bluesea]

Three words: American Bicycle Group. One well regarded brand gone early after the consolidation/acquisition, the second was reduced to a feeble player in their target market, and the third, well, it's there in name only.


American Machine and Foundry.

[pbarry]

:beer:

[Tyler Evans]

American Machine and Foundry.

Thanks for that. Actually quite fascinating: XXX (http://en.wikipedia.org/wiki/American_Machine_and_Foundry)

[pbarry]

From Wikipedia:

[AMF] Decline

By the late 1970s, the company encountered difficulties. The absence of stable management (the company had seven presidents between 1972 and 1982), aging production facilities, rising labor costs, and the inability of AMF to operate efficiently and control its many corporate product divisions from its headquarters in White Plains, New York, contributed to a steady decline in sales and profits. Unlike large Japanese corporations such as Matsu****a Electric Industrial, which had a standing corporate policy of discontinuing any product line or division in which they were not able to stay in first or second place in total market sales, AMF had continued a practice of purchasing new companies in unfamiliar markets, while simultaneously failing to reorganize and modernize its core operations.[11] As a result, during the late 1970s and early 1980s, the company lost an average of US$8 million per year. Some subsidiaries were sold, including Harley-Davidson in 1981.

For a time, the Italian scuba-diving equipment manufacturer Mares was part of AMF, and was able to secure the rights to the MR-12 regulator, previously made by Voit, and to continue manufacture of the regulator. Mares would revert to being an independent manufacturer after AMF was sold. It eventually became part of a worldwide consortium of sports equipment companies, ironically including another former AMF division, Head.[12]

In 1985, AMF was acquired through hostile takeover by Minstar Inc., a Minneapolis-based holding company controlled by investor Irwin L. Jacobs.[13] Minstar, Inc. sold its AMF Bowling Division to private investors in August 1986.   The division, which became AMF Bowling Company, Incorporated, manufactured bowling pins and lanes at its plant in Lowville, New York, and related equipment at its plant in Shelby, Ohio.   After taking over AMF in November 1986, the new owners sought to reverse $7 million in losses suffered in 1986 at the two plants and to make the company competitive.   They cut expenses by $10 million and laid off 172 salaried non-bargaining unit employees.   A few months before selling the Bowling Division of AMF, Minstar had successfully negotiated a 24% wage cut and 14% benefit cut for the employees at the Shelby plant.   In 1988 however, AMF closed the Shelby, Ohio facility that had operated since the 1950's. The company continued supplying equipment to the bowling industry as AMF, located in Richmond, Virginia.

[Z3c]

If I'm guessing, and I am, what Serotta lacks is distribution. Maybe DCG wants to offer the gamut from low to high end to LBSs that feel they might need Spesh or Trek to compete and don't want to work it with one brand at a time but now can take a menu from DCG. That does not preclude Serotta being Serotta as long as lower end Asian carbon comes from someone else (Blue and names to come). A stable of artisan companies can succeed under an umbrella if the right people are at the top. Nothing Bill has said here suggested he was about to throw in the towel, so unless the rug was completely pulled out from under him, this deal fits with the stuff he's been working on.

Distribution is only an issue when you have demand. I'm confident that UPS would be happy to solve any distribution issues should they develop..

[pbarry]

Some easier to read copy from Bicycle Retailer, (no offense C.M.):


Serotta, Blue and Mad Fiber consolidated under Divine Cycling Group
Published June 19, 2013
by BRAIN Staff

NEW YORK, NY (BRAIN) — Serotta and Blue Competition Cycles are joining Mad Fiber Wheels under the umbrella of the Divine Cycling Group, an investment group formed last year. DCG bought Mad Fiber, its first industry acquisition, in February.

Terms of the agreement were not released except that Blue and Serotta shareholders will become shareholders in DCG and be represented on DCG's board.

Serotta was founded in 1972 by Ben Serotta. The company has been through several iterations. Last year Serotta announced it had "partnered" with financial services group Bradway Capital.

Likewise, Georgia-based Blue was acquired by an equity firm, Lake Rudd Capital Partner, late last year.

In a statement, DCG founder Gary Ullman said, “Collectively, these companies bring together manufacturing expertise across materials and product categories and extensive aerodynamics expertise. They combine American manufacturing knowledge with significant experience operating in Taiwan and elsewhere in Asia. The three businesses’ sales forces cover all major cycling markets, and utilize the best combinations of traditional distributors, dedicated sales offices, trading partners and representatives.

"And they are now brought together under a board that has world class experience in acquisition and strategic integration such that they will be able to better attract investment, more rapidly grow product lines and profitability, and benefit from combined strengths while maintaining individual brand identities under their current management teams. This, as DCG Inc continues its commitment to growth through acquisition and further builds the company.”

Ullman said each company will maintain its current production facilities. [Emphasis added. Stay tuned.]

Watch for more on this story Wednesday.

[54ny77]

Holy Matsu****a!

Editing software....too funny...


[QUOTE=pbarry;1370166]From Wikipedia:

[Elefantino]

http://www.levinlaw.com/sites/www.levinlaw.com/files/images/panic-button.jpg

[1centaur]

Distribution is only an issue when you have demand. I'm confident that UPS would be happy to solve any distribution issues should they develop..

In my business, distribution means more than delivery.

You can build the best item in the business but it does not sell itself and the cost structure may not allow it to build markets by word of mouth. I would guess that Bill's figured out how many units have to be built to make the desired profit given the rationalized cost structure, and it's a number that needs to happen quickly. It is not uncommon for a manufacturer to give up partial ownership to a marketing organization. That deal can be structured in all sorts of ways to encourage success or dissolution.

[happycampyer]

...

HOWEVER,
If you currently make 6 cents an hour slaving out carbon fibre in Taiwan, REJOICE - yet another US firm is lining up to continue your gainful and most excellent employment. Prepare for 18 hour shifts rather than 16, and an extra 12 cents a day.Maybe the 10-year olds that are making Parlee Z5's and Enve forks have some spare capacity.... ;)

[pbarry]

See new Meivici paint scheme below. ;) Poking Rusty now. We know you've had a busy day, but it's time to chime in soon.

[Z3c]

Poking Rusty now. We know you've had a busy day, but it's time to chime in soon.

I for one will be shocked if he jumps into this; that he has not to this point is very telling in my opinion..

[Z3c]

I stand by me earlier comment: Serotta = Masi.. soon to be carried as a cheap bike in 2d tier shops. Honestly, I hope they bury the brand name as opposed to offering $1500 complete bikes. Hopefully Ben negotiated this.

I do think Hampsten is what Serotta was long, long ago..

[bluesea]

http://www.levinlaw.com/sites/www.levinlaw.com/files/images/panic-button.jpg


Whatever happens, happens. I don't expect the new Pronto and its butted tubing, to be eliminated or commercially watered down in the short term. That's more than I can say for some of my favorite restaurants.

[pbarry]

OK. Feeling like we've been worked here. Tell me it ain't so.

[Jack Brunk]

Bill's silence is that he's really busy.

[Bikerist]

Bill's silence is that he's really busy.

Hopefully, busy doing something other than celebrating.

[Jack Brunk]

but please use my whole statement. I could care less really what happens from the business standpoint. Since they don't build mountain bike frames anymore, Well business go through issues like this every day. Been there done that.

[fuzzalow]

I have no way of knowing what is really going on but that doesn't prevent me from speculation and chatter as a cycling enthusiast and a Serotta owner. And that's fine as conversation goes.

Rusty Lion is presumably in the loop about all that is happening. I don't think it is warranted or fair to infer anything about the developments or the person as because Rusty Lion has not posted here to give the forum a report. Deals, whether consummated, pending or unrealized are not openly spoken about. Nor is realistic the expectation to be informed as to the underlying business strategy.

Like the old saying "Those that know aren't talking and those that are talking don't know".

[BumbleBeeDave]

I for one will be shocked if he jumps into this; that he has not to this point is very telling in my opinion..

It's barely been 24 now since this was announced. The guy has day to day production to deal with--and employees to deal with who probably have their own long list of questions and worries. And new investors to deal with.

At the bottom line we're a bunch of yahoos on a bike forum who might--might--in the future be customers. While I'm sure he probably IS concerned about the PR and reputational aspects of this event, I strongly doubt running to his keyboard to assuage Paceline members uninformed assumptions is at the very tip top of his priority list.

Go for a ride and give it some time. I'm sure that in the fullness of time (as the lawyers say) we'll know more.

BBD

[oldpotatoe]

I'm curious as to what the strategic motivation was.

Len

$$??

Just a thought

[oldpotatoe]

They already say how in their announcement.
They are going to outsource production (certainly carbon) to Taiwan.

Nothing from this point forward (or perhaps even for the past year) has been done to make anything "better" it is now about making things more efficient, profitable, and cheaper to produce.

And I am quite sure poor Ben is falling down the rabbit hole. Maybe, just maybe he actually believed last years "partnership" would preserve his brand, but certainly now he realizes it is all down the drain and out of his control. I assure you it was not his dream to merge with Blue and make Meivici's in taiwan in 2016.

Not sure if that's true of serotta but it certainly is what Merckx did. He saw one of the only ways for Merckx brand to survive is to have them made not in Europe, so he sold, stays as 'consultant', rides his bike.

I'll bet there are some similarities.

[LegendRider]

$$??

Just a thought


Agreed. I think some folks are over-thinking this. Bill needs capital to execute his business plan.

I have no idea if DCG are vultures who will ultimately destroy Serotta or are genuinely committed to the brand's long-term success.

I don't know Bill, but my impression is he's not trying to dress the company up and flip it or reinvent with lots of overseas production, etc.

[oldpotatoe]

Agreed. I think some folks are over-thinking this. Bill needs capital to execute his business plan.

I have no idea if DCG are vultures who will ultimately destroy Serotta or are genuinely committed to the brand's long-term success.

I don't know Bill, but my impression is he's not trying to dress the company up and flip it or reinvent with lots of overseas production, etc.

Last post as it seems I get in trouble with these fast.

I doubt in the future ben with be anything more than what Merckx is now to Merckx. A consultant. There is a vision perhaps but I don't think there really is a 'ben's business plan' anymore.

Could be wrong but I guess we'll wait for RustyLion, unless he's no longer in the picture-

[shovelhd]

All of the major bicycle companies are owned by investment groups. Would you rather they be joined with a couple of small companies that complement each other or absorbed by a giant and discarded like Lemond, Klein, and Fisher? Give this one some time.

My guess is that the offshore resources will at least start with a Trek model. Expand the product line. Introduce a Ti Merlin competitor at $1500. Move the Legend and Pronto manufacturing offshore. Mix in molded carbon. Keep the high end and custom stuff in NY. If they do this right there is no need to lay anyone off, in fact, they should be planning on expansion of the high end stuff.

[Kirk Pacenti]

I have a feeling it's all going to work out just fine.

Cheers,
KP

[Mikej]

Best of luck

[Len J]

Having been heavily involved in putting these things together for P/E groups, the strategic motivations range from soup to nuts. Sure funding is at the heart of this, but, it's investment funding, which always has a strategic thesis to it.

This thesis can involve synergy savings, or not....growth from leveraging of distribution or not, as well as many other pieces.

It's those pieces I'm curious about. Many posters in this thread are making assumptions about these pieces that are just that, assumptions.

We will only know by their actions.

Len

[Charles M]

Sorry for the !!!

I had to cut and paste the PDF from another PC and that was how it transferred...

I didnt have the time at the time to cut em all out.

[reggiebaseball]

Having been heavily involved in putting these things together for P/E groups, the strategic motivations range from soup to nuts. Sure funding is at the heart of this, but, it's investment funding, which always has a strategic thesis to it.

This thesis can involve synergy savings, or not....growth from leveraging of distribution or not, as well as many other pieces.

It's those pieces I'm curious about. Many posters in this thread are making assumptions about these pieces that are just that, assumptions.

We will only know by their actions.

Len

To think anything positive will come of this requires you either be completely naive about these matters, or complicit in this type of shenanigan. I guess we can put you in the "complicit."

stop drinking the cool aide.


Within 18 months "Serotta" will be Ben collecting a designer-emeritus check in NY, while thousands of Chinese people make Serotta's in Blue's existing manufacturing facilities. They will then make cheap versions of MadFibers and market the package as a fabulous product completely "designed in the USA"

This was an ACQUISITION. A bunch of hedge guys decided to buy a bike company desperate for cash. These are not "partners" or "investors", this is active management by a new ownership group. They already released Ben's statement about how thrilled he is to get back to designing bikes (that will never be made in the USA again).


You know, maybe if a few more people got pi$$ed and didn't roll over and play optimist, some of this stuff would stop happening. Probably it wouldn't matter one bit.

If you put a seed in the ground, do you really have to "wait and see" if the roots grow down and the leaves grow up? Will "time only tell" or have we seen it enough times to know how that works yet?

[BumbleBeeDave]

. . . on the sarcasm and borderline personal attacks. Feel free to make all the assumptions you want on either end of the spectrum, but let's keep it civil.

BBD

[Len J]

To think anything positive will come of this requires you either be completely naive about these matters, or complicit in this type of shenanigan. I guess we can put you in the "complicit."

stop drinking the cool aide.


Within 18 months "Serotta" will be Ben collecting a designer-emeritus check in NY, while thousands of Chinese people make Serotta's in Blue's existing manufacturing facilities. They will then make cheap versions of MadFibers and market the package as a fabulous product completely "designed in the USA"

This was an ACQUISITION. A bunch of hedge guys decided to buy a bike company desperate for cash. These are not "partners" or "investors", this is active management by a new ownership group. They already released Ben's statement about how thrilled he is to get back to designing bikes (that will never be made in the USA again).


You know, maybe if a few more people got pi$$ed and didn't roll over and play optimist, some of this stuff would stop happening. Probably it wouldn't matter one bit.

If you put a seed in the ground, do you really have to "wait and see" if the roots grow down and the leaves grow up? Will "time only tell" or have we seen it enough times to know how that works yet?

Lol.

They all end badly.

This would be amusing if it weren't so sad.

Len

[reggiebaseball]

I just meant they end badly for the actual people who MAKE things, like the Serotta employees. I think some might call them "the little people" or "just numbers on a page" or perhaps "those type of people"


The deals usually work out great for the financial guys, who then retire, go on to buy expensive bikes, and defend them on forums.



Remember mom and pop stores, stuff made in America, actual small entrepreneurs that made things instead of shuffled numbers on a page to "create" wealth?

Well all that was "improved" through "acquiring and consolidating" too. Can we finally say "that was bad"? Or do we still have to see if "time will tell" about that too?

Maybe in 100 years the history books (which of course will be written in the legally mandated national language, Cantonese) will talk about how amazing the finance guys were in the early 2000's to hand over America to it's rightful masters.

[cmg]

Not sure if that's true of serotta but it certainly is what Merckx did. He saw one of the only ways for Merckx brand to survive is to have them made not in Europe, so he sold, stays as 'consultant', rides his bike.

I'll bet there are some similarities.

the plastic Merckx i ride and the bike that made the brand are an ocean apart. sad.

[bluesea]

Bill's silence is that he's really busy.

At least 50% chance he is part of a solution, not part of a problem.

[HMBAtrail]

This was an ACQUISITION. A bunch of hedge guys decided to buy a bike company desperate for cash.

Not to split hairs or stir the pot but why do you assume these are "a bunch of hedge guys"? All signs point to a couple guys who raised cash and went hunting for club deals. Club deals are all fine and well and you can make money on them but it doesn't automatically doom the acquired. Not everyone is Chainsaw Al.

Private equity is not equal to hedge funds. Neither is equal to evil.

[reggiebaseball]

'hedge' is slang for any discretionary pile of money or "alternative" investment.
These are the same type guys, the same firms, the same philosophies regardless of era.

In the era I am most familiar with, you would call it "hedge guys"
Maybe 5-10 years earlier you would call it "vulture investors"
maybe 20-25 years ago it would be "corporate mergers & acquisitions specialists"

the "current" term (according to the Divine website) appears to be "corporate acquisitions and mergers" specialists.

Wait a minute, that sounds familiar!
What is old, is new again.

[HMBAtrail]

'hedge' is slang for any discretionary pile of money or "alternative" investment.

No it isn't.

And there are myriad good honest hardworking people in the "alternative" space that would take exception to your comment.

[EDS]

At least 50% chance he is part of a solution, not part of a problem.

Huge likelihood he is also contractually precluded from making public statements regarding the transaction.

[54ny77]

good grief.

http://ak.picdn.net/shutterstock/videos/1259956/preview/stock-footage-grinding-the-axe.jpg

[EDS]

good grief.

http://ak.picdn.net/shutterstock/videos/1259956/preview/stock-footage-grinding-the-axe.jpg

Gotta love people who have all the answers, particularly when they are the wrong answers!

[BumbleBeeDave]

. . . have anything substantively new to add to this conversation?

:confused:

BBD

[54ny77]

yes i believe it's currently 74 degree in saratoga with an expected high of 76, winds running westsouthwest at single digits, relative humidity in the high 30% range. a pleasant day overall.

. . . have anything substantively new to add to this conversation?

:confused:

BBD

[David Kirk]

. . . have anything substantively new to add to this conversation?

:confused:

BBD

No - I don't have any new info but I'd like to share a simple thought.

The only thing that will matter after this initial hubbub dies down is what Serotta actually does with its new situation. The statements made by the powers that be are of course meant to set a tone and tell us what they want us to think but they have no more value than the virtual paper they are printed on. So parsing the exact wording of the statements would seem to be throwing time down the drain.

Serotta will either make it fly or they won't and none of what we 'experts' think will in the end matter at all.

I can only say that I hope they make it fly and I'm hoping for the best for the brand and the people behind it..........and the only thing that will make it fly will be their products and their actions. So far we know little to nothing about either.

Dave

[54ny77]

http://i191.photobucket.com/albums/z113/jpmz06/occupybikes.png (http://s191.photobucket.com/user/jpmz06/media/occupybikes.png.html)

[shovelhd]

:hello:

[spacemen3]

http://i191.photobucket.com/albums/z113/jpmz06/Bike/occupybikes-1.png (http://s191.photobucket.com/user/jpmz06/media/Bike/occupybikes-1.png.html)
Awesome. I'm that guy. :D

[sc53]

:hello:

:hello::hello:

[victoryfactory]

All of the major bicycle companies are owned by investment groups. Would you rather they be joined with a couple of small companies that complement each other or absorbed by a giant and discarded like Lemond, Klein, and Fisher? Give this one some time.

My guess is that the offshore resources will at least start with a Trek model. Expand the product line. Introduce a Ti Merlin competitor at $1500. Move the Legend and Pronto manufacturing offshore. Mix in molded carbon. Keep the high end and custom stuff in NY. If they do this right there is no need to lay anyone off, in fact, they should be planning on expansion of the high end stuff.

This makes the most sense of all so far. The "Trek Model" allowed them
to continue to manufacture the high end stuff in the US and the cash
from the Asian stuff bankrolled the R&D here.
It takes smart determined people, though. I hope they succeed what
ever the plan is.

VF

[Chris]

This makes the most sense of all so far. The "Trek Model" allowed them
to continue to manufacture the high end stuff in the US and the cash
from the Asian stuff bankrolled the R&D here.
It takes smart determined people, though. I hope they succeed what
ever the plan is.

VF

I do too, but business has never seemed to be a strong point in the Serotta business.

[shovelhd]

Then they need to hire me as a consultant. I'm currently out of full time work.

:p

[DukeHorn]

I'm still trying to figure out how there are Cantonese speaking overlords in Taiwan paying 6 cents an hour to their employees. I guess my relatives in Taiwan have been keeping me in the dark.

It's sad but so what? It's not like we're suffering from a lack of choices in the cycling world right now.

[bikinchris]

Is this easier to read?

Serotta, Blue Competition Cycles and Mad Fiber Wheels Consolidate Under Comm on Ownership
NEW YORK, NY (June 19, 2013) ‘ The owners of Serotta, Blue Competition Cycles (BCC) and Mad Fiber Wheels announced today that the three companies have consolidated under Divine Cycling Group, Inc. (DCG).
DCG founder Gary Ullman said of the strategy behind the merger, “Collectively, these companies bring together manufacturing expertise across materials and product categories and extensive aerodynamics expertise. They combine American manufacturing knowledge with significant experience operating in Taiwan and elsewhere in Asia. The three businesses’ sales forces cover all major cycling markets, and utilize the best combinations of traditional distributors, dedicated sales offices, trading partners and representatives. And they are now brought together under a board that has world class experience in acquisition and strategic integration such that they will be able to better attract investment, more rapidly grow product lines and profitability, and benefit from combined strengths while maintaining individual br and identities under their current management teams. This, as DCG Inc continues its commitment t o growth through acquisition and further builds the company.” Each company will maintain its current production facilities.

Serotta, founded in 1972 by industry icon Ben Serotta, has a proud history of completely designing, engineering and producing every part of its marquee bicycle frames and forks. While the main offerings of Serotta have been and continue to be in the custom bike segment, the company recently launched several standard geometry stock models. Serotta crafts titanium, carbon and titanium and carbon bicycles.

Blue Competition Cycles designs and builds world class complete bicycles and framesets capable of giving elite athletes a competitive advantage, but which are also available to amateur athletes or serious enthusiasts. Along with other attributes, BCC’s bikes are known for their ground breaking aerodynamic features, developed in large part by wind ‘tunnel expert Mike Giraud. BCC is headed by CEO Steven Harad, who has significant industry and consolidation experience.

Mad Fiber, founded by one of the industry’s leading wheel experts, Ric Hjertberg, and Max Kismarton, a Senior Fellow at Boeing, has replaced the traditional wheel – a structure comprised of dozens of individual parts – with a one ‘piece tensioned carbon structure. Applying composites engineering principles from the aerospace industry, the Mad Fiber team has built an amazingly strong, aerodynamically slick and incredibly light carbon wheel set that can satisfy the needs of the most demanding professional, and they have made it available to cycling enthusiasts the world over.
DCG was formed in 2012 with the singular goal of consolidating cycling and other sport or recreation ‘focused companies that have strong individual brands and which offer products that are well ‘regarded within their respective industry segments. As a result of the transaction, BCC and Serotta shareholders will become shareholders in DCG and be represented on the Board of DCG.
The terms of the deal were not disclosed.

On another note, MAYBE??? the above acquisition means I could get my steel touring frame fixed now? They can't repair it (steel) and they want me to 'buy' a new frame. I don't want a Serotta racing frame. I want my touring frame fixed.

[rustylion]

Hi Chris,

Not all steel frames can be repaired. Assuming we are not repairing crash or similar damage, rust is the biggest factor related to steel frame repair.

We will not know what we can do and/or recommend until we see your frame here in the factory.

TIG or Lug welded. If TIG-welded, we can and do repair them, if repairable. If brazed/lugged, we no longer maintain raw materials and can't repair them. Instead, we refer customers to our long-time and trusted friend, Kelly Bedford, who is right up the street.

Pre-merger or post-merger, our steel frame repair offerings remain the same.

Let me know how I can help you further.

Thanks.

Is this easier to read?

Serotta, Blue Competition Cycles and Mad Fiber Wheels Consolidate Under Comm on Ownership
NEW YORK, NY (June 19, 2013) ‘ The owners of Serotta, Blue Competition Cycles (BCC) and Mad Fiber Wheels announced today that the three companies have consolidated under Divine Cycling Group, Inc. (DCG).
DCG founder Gary Ullman said of the strategy behind the merger, “Collectively, these companies bring together manufacturing expertise across materials and product categories and extensive aerodynamics expertise. They combine American manufacturing knowledge with significant experience operating in Taiwan and elsewhere in Asia. The three businesses’ sales forces cover all major cycling markets, and utilize the best combinations of traditional distributors, dedicated sales offices, trading partners and representatives. And they are now brought together under a board that has world class experience in acquisition and strategic integration such that they will be able to better attract investment, more rapidly grow product lines and profitability, and benefit from combined strengths while maintaining individual br and identities under their current management teams. This, as DCG Inc continues its commitment t o growth through acquisition and further builds the company.” Each company will maintain its current production facilities.

Serotta, founded in 1972 by industry icon Ben Serotta, has a proud history of completely designing, engineering and producing every part of its marquee bicycle frames and forks. While the main offerings of Serotta have been and continue to be in the custom bike segment, the company recently launched several standard geometry stock models. Serotta crafts titanium, carbon and titanium and carbon bicycles.

Blue Competition Cycles designs and builds world class complete bicycles and framesets capable of giving elite athletes a competitive advantage, but which are also available to amateur athletes or serious enthusiasts. Along with other attributes, BCC’s bikes are known for their ground breaking aerodynamic features, developed in large part by wind ‘tunnel expert Mike Giraud. BCC is headed by CEO Steven Harad, who has significant industry and consolidation experience.

Mad Fiber, founded by one of the industry’s leading wheel experts, Ric Hjertberg, and Max Kismarton, a Senior Fellow at Boeing, has replaced the traditional wheel – a structure comprised of dozens of individual parts – with a one ‘piece tensioned carbon structure. Applying composites engineering principles from the aerospace industry, the Mad Fiber team has built an amazingly strong, aerodynamically slick and incredibly light carbon wheel set that can satisfy the needs of the most demanding professional, and they have made it available to cycling enthusiasts the world over.
DCG was formed in 2012 with the singular goal of consolidating cycling and other sport or recreation ‘focused companies that have strong individual brands and which offer products that are well ‘regarded within their respective industry segments. As a result of the transaction, BCC and Serotta shareholders will become shareholders in DCG and be represented on the Board of DCG.
The terms of the deal were not disclosed.

On another note, MAYBE??? the above acquisition means I could get my steel touring frame fixed now? They can't repair it (steel) and they want me to 'buy' a new frame. I don't want a Serotta racing frame. I want my touring frame fixed.

[Ahneida Ride]

On another note, MAYBE??? the above acquisition means I could get my steel touring frame fixed now? They can't repair it (steel) and they want me to 'buy' a new frame. I don't want a Serotta racing frame. I want my touring frame fixed.

Call Kelly Bedford .... 518 538 8055

He can make the repairs ..... Kelly, Kirk and Wages were the guys who
originally built the lugged frames.

Kelly can repair it..... He has done many .... Seems like there is always
Serotta in his shop awaiting repair.

but depending on the damage, it could be more
efficient to purchase new.

[yngpunk]

I'm still trying to figure out how there are Cantonese speaking overlords in Taiwan ...

The reason you can't find them is because they probably speak Mandarin ;)

[bikinchris]

No real damage, just a cracked downtube. It is already in the Serotta shop. It's the red, white and blue CSI touring bike. They don't have the tube to replace it and I have been asked to buy a new frame to get a resolution to the lifetime warranty.

I am touring in Europe right now and thinking it over.

[verticaldoug]

I'm still trying to figure out how there are Cantonese speaking overlords in Taiwan paying 6 cents an hour to their employees. I guess my relatives in Taiwan have been keeping me in the dark.

It's sad but so what? It's not like we're suffering from a lack of choices in the cycling world right now.

I'm still trying to figure out how the avg taiwanese makes 20,000/yr at .6 cents an hour. Obviously, they must be working 900 hr days. No wonder American manufacturing can't compete. The lazy buggers only work 8 hrs. Darn unions.

Honestly, I think the median annual income between Taiwan and America is not very different.

[bluesea]

No real damage, just a cracked downtube. It is already in the Serotta shop. It's the red, white and blue CSI touring bike. They don't have the tube to replace it and I have been asked to buy a new frame to get a resolution to the lifetime warranty.

I am touring in Europe right now and thinking it over.



Can you explain the terms offered more clearly? How much are they crediting you for the CSi frame *they* cannot repair? 100% credit?

[rnhood]

I would take their recommendation and get a new bike. Never pass up an opportunity for a new bike :beer:.

[Pete Mckeon]

sad to read the announcement: Hope things work out.

[wooly]

I know everyone is waiting politely but I will just come out and say that I look forward to hearing from Bill, aka Rustylion, about this news. Especially now that he's chimed in on this thread.

[shovelhd]

If he's in a blackout period you'll be waiting a while.

[PaulE]

It's like it's 1994 (http://www.bizjournals.com/albany/stories/2002/08/05/story1.html?page=all) all over again

[slidey]

I'd think its mainly because Bill or for that matter any Serotta employee is forbidden to talk about the merger at this point in time, etc.

(shovelhd: Is the above what you meant by a blackout period?)

I know everyone is waiting politely but I will just come out and say that I look forward to hearing from Bill, aka Rustylion, about this news. Especially now that he's chimed in on this thread.

[shovelhd]

Yes. Take a look for what happens before an M&A or IPO. Mainly for public companies but good practice at any rate. Give the man his time.

[54ny77]

it's the cure period...pun intended....

speaking of which, check out these nuggets. really friggin' cool photos:

http://serotta.com/wp-content/uploads/2013/03/Carbon_Fiber_Lugs1.jpg

http://serotta.com/wp-content/uploads/2013/03/Carbon_Fiber_Mitering_Tubes-1.jpg

http://serotta.com/wp-content/uploads/2013/03/Bill-McDonald-2.jpg

[1centaur]

Blackout periods are lawyer mandated be-quiet days in order not to run afoul of public disclosure equality and is related to securities law, in my experience. I am not aware of an entity with public securities related to the companies we have heard of in this deal.

That said, Rusty Lion's non-response despite a blatant full copy-in (oh the bandwidth!) is a not so subtle hint that he's aware of our speculation and is not talking right now. This may be because he was asked not to so that the powers that be could get things done without speculation and with a unified message to affected parties (maybe including suppliers and customers who might appreciate communication before forum dwellers). Or maybe he has his own reasons. Either way, we've seen the white smoke and the communication will follow.

[Len J]

Think confidentiality agreements if you want to understand the silence from Bill. All communication will be coordinated, and should be.

Len


Sent from my iPad using Tapatalk HD

[rwsaunders]

No news on the Serotta website.

[rustychisel]

Either way, we've seen the white smoke and the communication will follow.



ugh oh. Does that mean there's a new world leader, or are Crazy Horse and Sitting Bull about to charge over the hill?

[slidey]

The pope's having a BBQ!

Either way, we've seen the white smoke and the communication will follow.

[wooly]

Blackout periods are lawyer mandated be-quiet days in order not to run afoul of public disclosure equality and is related to securities law, in my experience. I am not aware of an entity with public securities related to the companies we have heard of in this deal.

That said, Rusty Lion's non-response despite a blatant full copy-in (oh the bandwidth!) is a not so subtle hint that he's aware of our speculation and is not talking right now. This may be because he was asked not to so that the powers that be could get things done without speculation and with a unified message to affected parties (maybe including suppliers and customers who might appreciate communication before forum dwellers). Or maybe he has his own reasons. Either way, we've seen the white smoke and the communication will follow.

Makes sense. Tough to wait and I'm sure harder not to say anything for Bill.

[Elefantino]

http://upload.wikimedia.org/wikipedia/en/f/f8/Bobby_McFerrin_-_Don't_Worry,_Be_Happy_(album).jpg

[BumbleBeeDave]

It's not like the world's financial markets are frozen and shivering in anticipation of the next word from Saratoga. Nuthins' gonna happen overnight here! There are no slavering crowds of cyclists camped out along Geyser Road waving pitchforks and torches and demanding an appearance by Ben on the balcony of the farmhouse.

I'm not an MBA, but given the history of the company if I were Bill I'd give it some time to shake out and in the meantime tell everybody to keep quiet, keep workin', and also keep quiet officially except for a general announcement.

There's nothing ominous about that. Lots of panties twisted, wailing, and gnashing of teeth here for no good reason.

BBD

[Ahneida Ride]

Vulture Capitalists actually risk their own frns.

Banks create $ outa thin air using "fractional" reserve.
They can overbook 10 to 1 (or more)
They call it a loan and collect interest on nothing.

[Elefantino]

See below.

[rustylion]

I thought you might find our perspective interesting so I wrote a blog post on the merger. You can find it here:

http://rustylion.com/?p=2713

Let me know if I can help further....and thanks.

[Ahneida Ride]

Bill

Thanks for the update !

[wooly]

Terrific update Bill. Underlying all of the discussion here and there on the interweb is a passion for a company and brand that has deep roots in cycling. I'm sure you feel it here especially because the forum was affiliated with Serotta for so many years. I'm happy to hear that things remain on course and that you believe it will make Serotta stronger. Best of luck. I'm enjoying my Legend!

[Len J]

Thanks Bill. Staying tuned.

Len

[MattTuck]

A good read, though I'd like to hear more details about what you're going to do with these new resources. I can see potential synergies in R&D, know-how/expertise and scale in terms of getting into bike shops, if that's your plan.

I guess we'll find out in the future based on what you guys end up doing.

[carlucci1106]

If there is a "meeting with the Bobs" perhaps some of us have an employment future with DCG.

Bob: What is it thatcha... do?

Paceline member: Well I pretty much spend the first 1.5 hrs of my day staring at my desk, or into space, while pretending to do TPS reports. I have those minimized on my desktop so I can pull them up if anyone passes by my desk...

but I am also constantly engrossed in the discussion on a bicycle forum that has myriad opinions on the bike industry, whether founded or unfounded in rational thought. When I am bored with that, I usually go on a mad "bike porn" spree, where I look at progressively sexier bikes until I am covered in sweat and my chin is moist with drool... Then I peruse the classifieds to see what bike porn I might be able to sell most of my belongings to afford. Then I eat lunch.

Bob (looking at the other Bob): He has upper management (at DCG) written all over him.:banana:

[bikinchris]

Can you explain the terms offered more clearly? How much are they crediting you for the CSi frame *they* cannot repair? 100% credit?

Last I heard, 'they' want to credit me for actual employee purchase from the past and buy a whole new bike at an unnamed price. They want to know "which one I want to buy first. Apparently 'they' don't want to sell frames, only bikes. Still have two and a half weeks of touring to do.