Skiers everywhere are in mourning …the good news is you may get your 2005 Seths pressed again.
It’s tough to get sentimental about a hard goods company. But if there was a day to tip a pint of Pine Box Spruce Springsteen, it’s today.
K2 was America’s innovative answer to the rise of the big ski manufacturers overseas in the mid-20th century—think: Atomic (Austria, 1955), Dynastar (France, 1963), Elan (Slovenia, 1945) and Salomon (France, 1947).
Along with Olin, Head and The Ski here in the states, K2 was a family affair with modest beginnings that ended up blowing up the industry. Brothers Bill and Don Kirschner built the first fiberglass ski in their Vashon Island garage and the rest is history. The K2 ski’s accessibility and rideability is largely to blame for the sport’s biggest growth spurt …from several thousand skiers in North America in the early ‘60s to the more than 8 million who shralp present-day.
While the company has had a series of owners, starting with Cummins Engine Company in 1976, followed by a group of Northwest investors called Sitca later that decade, then Anthony Industries in the mid-’80s, Sylvan Pools in the mid-’90s, British mega-corporation Jarden in the early ‘00s and then its most recent owner, Hoboken, N.J.-based consumer-goods giant Newell Brands (they make Sharpies Elmer’s glue too!), and a series of missteps, including moving all the things to China a decade ago and relocating the marketing arm to downtown Seattle, K2 did retain some of its homegrown ethos.
Now it’s going to be parted the fuck out like a stolen Accord.
New York-based private equity firm Kohlberg & Company bought the company (which includes Ride snowboards) for $240 million on Friday.
Kohlberg, which specializes in middle market takeovers (companies worth between $100 and $500 million), has a valuation of $2.2 billion and more than 70 investors as of December 2016.
They specialize in a type of investment known as a leveraged carve outs (buyouts of divisions from larger companies). The firm makes its money by taking underperforming or top-heavy companies facing financial challenges, firing everyone, streamlining or shifting operations overseas, then fucking flipping for 2x-3x the original investment and taking a tax write-off in the interim.
Acquire, strip down, leverage the brand while diminishing the product, sell and move on — standard PE playbook stuff.
The immediate result of a PE acquisition is upheaval, and Kohlberg is no exception.
MarketCast, a global research/marketing firm based in LA, was acquired by Kohlberg last fall. If you believe Glassdoor reviews, as soon as acquisition was finalized competent people left/were fired. They were replaced by sycophants and a HR department that is inadequate and tone deaf to the concerns of worker and, according to one reviewer, “The leadership is completely out of touch with the people. The pressure to do more and faster gets worse every day, if you do a good job, you never hear from anyone at all, if you make an error, 3-4 people will ream you and make you feel like you are completely worthless. Very negative environment with very little room to grow.”
Also, don’t expect any innovation coming from K2 anytime soon. The first thing PE firms do away with in manufacturing spaces is R&D (too much overhead, too much hassle …and doesn’t pad the bottom line fast enough to aid in the flip.) So maybe look for the return of your favorite Seths, Coombas or Pontoons—because they will sell you nostalgia.