Home Speaker Asylum

General speaker questions for audio and home theater.

Sorry to be a wet blanket

I handled one semi-large transaction, an audio company where the founder was still alive and wanted out. It was a going business and reliably profitable and its books were in good shape, good enough to be audited by a stranger, and that is not usually the case!!!

My client did not want to spend the money, but I insisted that he get an independent business valuation from a certified analyst.

Best $5000 the guy ever spent.

The business valuator phoned me to say, "He has to sell as soon as possible. He is not quite breaking even on operations. The business is only profitable because of currency value imbalances."

And when the table turns, much misery ensues.

My guess is that of the hundreds of loudspeaker businesses listed in Stereophile's buyer's guides, the top 20% are plausible acquisition targets (Wilson Audio), the middle 60% would be a case of, you are buying yourself a 60 hours per week job that doesn't pay better than any other job, and the bottom 20% have no commercial value.

Fine audio is a totally mature industry that hit its peak in the 1970s and has been being squeezed in a vice since then. The high-end loudspeaker business is in the game of "Last Man Standing." Unless a business has a robust US dealer base plus steady exports to at least a dozen countries, it can't be worth much. Especially if the new owners have to hire people to build the loudspeakers.

Sorry to be a wet blanket, and no disrespect to Bobby. He and his wife were on my prayer list, but I had no idea at all that his situation was more perilous than hers. I emailed him and heard back from him less than a week before he died. So, I am still a bit in shock, and very saddened.

To use a different example, how much is the intellectual property (all the patents are expired...) and production equipment of Shahinian loudspeakers worth, in that they have as far as I know no US dealer base at all. You pay somebody some large amount of money to roll up your sleeves and work like a dog, while Andrew Jones is making $300 loudspeakers that are all the loudspeaker most people want.

Audio is a very tough business these days, and loudspeakers are extra tough because the cost of entry is not all that high. Five thousand bucks later I can have prototypes and a trademark and a room at a high-end audio fest. I might get lucky (speaking only hypothetically).

So, terribly sorry all around.

john


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