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Good News or Bad News for Cannondale?

C.P.

Monkey
Jan 18, 2004
547
8
SouthEastern Massachusetts
It might otherwise be bad news, based on how Dorel's historical approach to the market (IE Big Stores like Walmart etc), but there's word that Dorel will be changing their approach and creating two distinct divisions, one to address the big market chain stores (x-marts etc) and one to hit independant bike shops...source
 

laura

DH_Laura
Jul 16, 2002
6,262
14
Glitter Gulch
200 million in an all cash transaction, sounds pretty mafia-esque.

Explain this to me, because I am no business woman. Why would you sell your company for the amount of money that said company makes in one year? 200 million is a lot no matter what but it seems that it would be a better idea to hold onto it and make that much every year. And If they had a 2007 sales of 200 million, how much of that ended up being profit? Business people teach me.
 

Transcend

My Nuts Are Flat
Apr 18, 2002
18,045
0
Towing the party line.
200 million in an all cash transaction, sounds pretty mafia-esque.

Explain this to me, because I am no business woman. Why would you sell your company for the amount of money that said company makes in one year? 200 million is a lot no matter what but it seems that it would be a better idea to hold onto it and make that much every year. And If they had a 2007 sales of 200 million, how much of that ended up being profit? Business people teach me.
Well you nailed it with the last question. That wasn't 200 million profit. The sale is 200 million profit. After staff, development, product etc, they only saw a fraction of that as profit.
 

Slugman

Frankenbike
Apr 29, 2004
4,027
0
Miami, FL
Sounds like someone wanted out of the bike business.

Selling for the same value of ONE YEAR of sales... not the best deal.

And the new boss is the guy from pacific - now there is some street cred.
 

Bad Ronald

Chimp
Jun 30, 2005
55
0
Danbury, CT
A company will typically sell for 7 times it's ebitda (that's earnings before interest, taxes, depreciation and amortization). That acronym basically takes into account everything it takes to make a company run and whatever is leftover is that percentage.

I don't think it is such a bad deal. Cannondale has a ton of potential and with the buying power of Dorel / Pacific / Cannondale they are going to get really good pricing on high end (and typically low volume) parts. This will free up cash to put towards R&D projects, better and more competitive pricing, and bigger and better dealer bases.
 

Mike B.

Turbo Monkey
Oct 5, 2001
1,522
0
State College, PA
Also keep in mind that Cannondale was owned by an investment company. They have no interest in the bike business specifically and instead were more in to the fact that they paid $50 million for the company just a few years ago. Quadrupled their investment in about 4 years, not such a bad deal for them.
 

cannondalejunky

ease dropper
Jun 19, 2005
2,928
1
Arkansas
thats probably gonna be good for cannondale, their stocks have been dropping for a long time, they've been border line going out of business for a while too
 

Bad Ronald

Chimp
Jun 30, 2005
55
0
Danbury, CT
thats probably gonna be good for cannondale, their stocks have been dropping for a long time, they've been border line going out of business for a while too
Hmm, where did you hear that from, Specialized? Seriously though. Cannondale has been financially stable ever since Pegasus took them over after the bankruptcy. The rumor mill is always a flurry with wrong info.
 

Cru Jones

Turbo Monkey
Sep 2, 2006
3,032
0
Hell Track
Good News For People That Love Bad News

Love that album.

Any idea what fraction. Like less than 5%. I would imagine a company like canondale has a huge overhead.
It's possible they weren't making any money. For example, a company I work for bought another company for about 200 million. That company does about 400 million in sales, but had actually been in the red the last few years (they lost 5 million two years ago). My company came in, cleaned house, and brought them back to positive last year. The main reason they bought the company wasn't for the immediate financial gain, but because they had control over a market they wanted. There's just so much going on in in these multi-million dollar deals. My company has a whole department dedicated to researching acquisitions.
 

Westy

the teste
Nov 22, 2002
36,484
3,238
Sleazattle
The company I work for has bought out competitors, sold all the assets, fired the employees and discontinued all their products simply to remove them from the market.
 

laura

DH_Laura
Jul 16, 2002
6,262
14
Glitter Gulch
Good News For People That Love Bad News

Love that album.



The main reason they bought the company wasn't for the immediate financial gain, but because they had control over a market they wanted. There's just so much going on in in these multi-million dollar deals. My company has a whole department dedicated to researching acquisitions.
Ahhhhhh, interesting. I am learning more and more. I would love to go back for an MBA just for the hell of it.