Don't know what all this may mean, and it sounds like almost an internal sale, but the company is being sold: Horizon Hobby, Inc., an international developer, marketer and distributor of radio control (RC) hobby products, model trains and other hobby products, announced today that its board of directors has signed a definitive agreement under which Horizon Hobby would be sold to an investor group led by Joe Ambrose, Horizon’s Chief Executive Officer. The investment group includes Armory Capital, LLC and Mill City Capital L.P., two investors that have deep experience with management-led acquisitions. Financial terms were not released.
Wonder what this may bring? New products? Re-releases of existing products? Downsizing the company and discontinuing some products we dont want to see go? Maybe it is a good thing. Hopefully this new investment group has a different vision than what Horizon has for the last several years. Ryan
I have a large distrust of these "investor" groups. I hope they do not see their new asset as a cow to be milked to death for quick cash.
I tend to distrust investor groups as well. While it's true you need investors to run just about any business, it seems to me that a disproportionate number of these "investor groups" are out to make a quick buck at the long term expense of the company. That being said, in the case of Horizon, unless one of the segments other than Athearn is pulling in some serious $$$, the fact that the CEO is in charge of the buyout makes me wonder a little. As CEO, Ambrose should have a pretty much complete picture of the financial state of the company, and I really don't see the CEO leading a buyout just to raid the corporate assets (although it's not impossible). A quick check of Horizon's corporate page shows they're apparently employee owned, or were until some point since 2006. I'm no expert on these things, but I am curious to see what happens to Athearn as a result of this buyout. I hope it means good things for N scale.
I have some experience in the investment business and this sounds like a classic management buyout. This type of transaction is often referred to as an LBO or Leveraged Buy-Out. Management usually feels they can do a better job running the business than the current owners, therefore earning a greater return, and they leverage the assets to buy the business. That doesn't mean there will be any changes, it is often a combination of reducing expenses and re-assigning people that brings in a better return. Of course, there could be lots of change, either way. Time will tell. I think we have to wait for the new owners to make a statement then see what the next few new product announcements bring. Dave Ferrari
THis is from the local paper in CHampaign http://www.news-gazette.com/news/business/2013-12-09/horizon-hobby-being-sold-investors.html Horizon was already employee owned, this is really just a shift in the upper management and gives them a cash infusion. Horizon is a big company and is one of the main RC suppliers in the US and the world. Not sure what it means for their train business, but overall I think this is a good thing for the company.
It all depends. There are investor groups that grow businesses, and investor groups that ruin businesses. BNSF Railway is owned by an investor group led by Warren Buffet.
His overall history also has some failures in it. A lot of folks overlook how he made and still makes a lot of his money: The band wagon effect. People who watch and mimic his every move, putting good sized sums of money in his pockets...
Horizon Hobby owned my LHS... until it closed.... not too worried about it as I don't own a piece of athearn equiment anyhow. I hope though that they step up their N scale game, some more BN F45's would be a good start.
There is one good thing that could come of this....but I dont wanna junx it. Soooooooo....I'll be quiet and go sit in the corner with the rest of ya with my fingers crossed !!
This doesn't make sense. If as you say, "Management usually feels they can do a better job running the business than the current owners..." Doesn't management run the business for the owners?????? Are they not doing their jobs? Here we have the CEO involved in the buy out group. If he can't do a better job of running the business for the current owners how will he do it on hos own??? Here is my take on this. I see Athearn's immediate withdrawal from the world of N scale due to old Irv Athearn having been reincarnated and has come back to take control of the company and make good on his original statement that he would never get into N scale. :-D
the company that I work for had some of these investment groups come in. Our products got better and I got one hell of a raise and more American jobs have been created
Whats the worst thing that can happen? Athearn produces LESS products in N scale? Maybe they will dust off some of the MDC/Roundhouse molds and rerun them...
From the newspaper article --- "Horizon Hobby Inc. announced Monday that its board of directors signed an agreement to sell the company to an investor group led by Joe Ambrose, Horizon's chief executive officer. The group includes: — Armory Capital LLC, a Champaign-based family investment office founded by Jacob Ambrose, Rusty Freeland and Greg Lykins, in association with the August C. Meyer Jr. family." I assume that Joe and Jacob Ambrose are related - I assume they are in agreement for what is going to happen. My third assumption is that means things will continue as they have with Horizon/Athearn.......
OTOH- The same happened where my wife works. They took away all kinds of perks and incentives. Pay increases have become non-existing. Productivity has fallen, they are constantly behind on work. Turnover has gone up, thus helping reduce payroll by paying new hires even less. Instead of being a happy work place, it is now a stresser meat grinder. Morale is in the dumper, and this Christmas, nothing. It all went by fiat to a company charity. Employees who had counted on those few dollars for their own Holiday use are livid. (While the company beats it's chest, using this as a PR tool.) Instead of having a waiting list of people who wanted to work there, they now have constant vacancies, as the word is out..... Those who do hire on, many quit within a month. And this is in an area where a good number of people are seeking employment. Less than two weeks ago, my wife's best friend of many long years quit there, and took a lower paying, less stressful job.
Horizon was started by family and friends in the mid 1980's (an investment group). They had a good plan and it worked. Hire and promote good people who have experience with in the hobby. They have continued with that philosophy to this day and they have grown exponentially. Their ESOP is only proof of their commitment to this philosophy. When they decided to get into distributing within the model train business they did it in a big way (fully committed) by acquiring Athearn and MDC thus becoming a manufacture/importer. As a model railroad hobbyist I believe I have benefited. As I remember up to that point Athearn only produced models in HO scale. Athearn had been searching for a new soul after the death of Irv Athearn In fact there was another investment group in the interim before Horizon and although they carefully managed the legacy of Athearn it wasn't until the acquisition by Horizon that Athearn was substantially revived. Like many of you change always causes me to look up and take notice especially of those things that I have a passion for. Along with many of you I will be watching with hope and anticipation of great things. So to those who work at Horizon "the investment group" thank you for making my hobby better. I wish you success with the new changes.
I hate to see Athearn change hands yet... again. The principals by which Irv Athearn invested in, established and ran his company. The simplicity of his train equipment, parts availability, and at very reasonable prices, are all a thing of the past. It hasn't nor will it be the Athearn of the yesterday. Yes, big improvements...no doubt...with prices skyrocketing. One thing is guaranteed, change is coming, for better or worse. A shout out of thanks to Irv Athearn, the HO equipment he produced and what he brought to the hobby. What it has been and meant to me... as I grew up and matured into a railroad modeler. Price was right and I could work summer jobs to purchase Irv's new equipment. One thing I miss, the phone line was always open with ideas and suggestions going back and forth. I do miss that. Never mind the ease to take his kits and do your own custom if not prototype work. So easy! Yep, I miss that as well.
The timing of this is VERY suspicious (and yet VERY encouraging to me!!!!). I mean let's look at the facts. 1. Athearn announces a Missouri Illinois car. 2. One of the head guys is announced as buying the company. It is obvious these facts are connected. Cause and effect. Months ago, some pointy-heads at Athearn said- "Hey let's do a MI car." The head guy said-- are y'all crazy? That would hurt Trainboard. They're still trying to sell the rest of theirs. We like Trainboard. We can't stab our friends in the back! Awwww heck..... we'll buy the company and show you how it SHOULD be run. Yep. That's what I think happened. ummmmm---- this is humor and sarcasm. I like Athearn.). :cute:
