Round 2 purchased by an investment firm

[charger74]

Here is the link

https://www.insideindianabusiness.com/story/43230616/new-york-company-buys-south-bend-collectibles-business

[Robberbaron]

Uh oh.....

[charlie8575]

Other story.

https://culttvman.com/main/round-2-news-1-round-2-has-been-sold/

We'll soon see if this is good or not.

Charlie Larkin

[Lunajammer]

Tried to look up other articles, but they all pretty much repeat the same press release of precious little info and flowery optimismistic generalities.

[Robberbaron]

5 minutes ago, charlie8575 said:

Other story.

https://culttvman.com/main/round-2-news-1-round-2-has-been-sold/

We'll soon see if this is good or not.

Charlie Larkin

That article mentions my main concern: the RC2 debacle that nearly destroyed the AMT, MPC, and PL brands.

The fact that they've bought controlling interest usually equates to they can do whatever they want, whenever they want.

You'd hope they would continue the momentum that Round2 has been building lately, but who knows?

With us starting to get extinct kits resurrected with new tooling ('63 Nova wagon, body for the upcoming '64  Cutlass), I hate to see anything that could rock that boat.

[wrenchr]

I'll try to stay optimistic.

[wrenchr]

3 hours ago, Robberbaron said:

That article mentions my main concern: the RC2 debacle that nearly destroyed the AMT, MPC, and PL brands.

The fact that they've bought controlling interest usually equates to they can do whatever they want, whenever they want.

You'd hope they would continue the momentum that Round2 has been building lately, but who knows?

With us starting to get extinct kits resurrected with new tooling ('63 Nova wagon, body for the upcoming '64  Cutlass), I hate to see anything that could rock that boat.

Couldn't agree more. 

[niteowl7710]

First thing to keep in mind is the basics of financial capital. Round2 isn't a public company, therefore it can't issue stock in the company to raise money. The way private firms do the equivalent process is by selling fractional ownership interest in said company. Controlling ownership could be anything from 51% to 99.9%, but for the moment at least Tom Lowe is still running the company. His background is in finance before and in between running Playing Mantis, so he's not some bumpkin that doesn't understand how all of this works. I'd also bet push comes to shove he could buy his way out of this agreement if he really wanted to, at least to the extent that he would regain control of at least 51% of it.

That new tool TranStar is going to cost about 3/4 of a million money buckaroos to bring to market, which means they need to sell round about 19k of them to break even unless they can issue more than one version (although the overall bottom line number is effectively the same if it's 10k 4070As, and 9k Coke 4070As).  If they are going to continue to invest in new tooling, whether all new or further down the restoration of old into new, they'll need significant capital investment. New tooling is a long term investment/return game, a lot of money up front you hope you make a profit on the back end. 

Color me optimistic, with a dash of cautious.

[keyser]

Better link more info. 
When they say “closed” that means the deal closed, not the company, so chill. 
https://www.businesswire.com/news/home/20210125005285/en/Praesidian-Capital-Acquires-Collectibles-Business

They took stake in K1 karting in 2018. Mostly a private equity and mezzanine finance for private mid sized companies. Not a huge firm but maybe 3-500mm. 

[Dave Van]

During my 25 years as a Sr Analyst for one of the biggest banks I did 'Due Diligence' for a number of much larger investment firm deals. In the end the deals ended being FANTASTIC or a dumpster fire. I'd like to think this will be FANTASTIC but only those on the inside know as R2 is a private co w/o any public reporting.

BTW R2 landed a NEW Star Wars license deal for upgraded old kits and all new tooling. That takes cash.

[Luc Janssens]

27 minutes ago, Dave Van said:

During my 25 years as a Sr Analyst for one of the biggest banks I did 'Due Diligence' for a number of much larger investment firm deals. In the end the deals ended being FANTASTIC or a dumpster fire. I'd like to think this will be FANTASTIC but only those on the inside know as R2 is a private co w/o any public reporting.

BTW R2 landed a NEW Star Wars license deal for upgraded old kits and all new tooling. That takes cash.

Hoping for the best too, and in the same vein as the post by James, it takes money to make money, something I said many times before but sometimes in a rather unsympathetic manner, cuz I was loosing faith.

Anyway again hoping for the best for all involved and that we modelers/collectors can benefit from it for a long long time.......

Luc

Edited January 30, 2021 by Luc Janssens

[slusher]

Things was going so good for us model men now I hope it doesn’t go the other way..

[Dave Ambrose]

I tend to look at private equity deals with a jaundiced eye. Usually, the firms come in, find a way to turn asset value into special dividends, then go bankrupt, sticking all the suppliers, bondholders, and employees with the losses. The British press appropriately refers to this as privatising the profits, and socializing the losses. 

There does seem to be a different type where they invest in companies that need "patient capital." Plastic models is certainly one of these, and hopefully, this deal will be in this category. Science fiction modelling is one of the growing categories, and I wouldn't be surprised to see investment there. Star Wars is an enduringly popular franchise, and getting a license is big. I gave my grandson one of the Revell X-wings, and a year later, it's still one of his favorite toys.

Given China's treatment of intellectual property and tooling, it may well make sense to manufacture in the US. Makes for good press, and you might be able to make it work if you set up in an enterprise zone, or work out some incentive deal in a depressed area. 

[maxwell48098]

FYI - Praesidian also owns Planet Fitness gym chain for 15 years you folks that work out there.  Planet Fitness has expanded every year except 2020 due to Covid gym shutdowns.  So maybe the new cash is a a good thing.

[espo]

I hope this will give round 2 the financial backing it needs to maybe offer some new kits of their own tooling design. My big concern  would be his not having the controlling interest in the business. 

[lordairgtar]

Yes, this looks like more of a capital infusion than anything else. The Star Wars license and the retool of a few model kits costs money. Some of us may not care for Star Wars and Star Trek but it is a big seller.

[mikemodeler]

Given the popularity and longevity of the Star Trek and Star Wars brand and  products, it's pretty evident why this investment firm did what they did. Tom Lowe seems to know how to run the company, give him some money to make some new stuff that will grow sales and they get their ROI.

[1972coronet]

At least we have Tom Lowe on the side of the hobbyists'  ; an obviously business savvy individual whom shares our love of this now-obscure hobby . That's definitely a GOOD sign . 

Bringing manufacturing BACK to the U.S. would be fantastic ---- if that happens ( Lord willing ) .

[mikemodeler]

3 hours ago, 1972coronet said:

At least we have Tom Lowe on the side of the hobbyists'  ; an obviously business savvy individual whom shares our love of this now-obscure hobby . That's definitely a GOOD sign . 

Bringing manufacturing BACK to the U.S. would be fantastic ---- if that happens ( Lord willing ) .

With the push for a $15 federal minimum wage, the price of kits would surely go up, so I don't see that as a likely scenario. Most manufacturing would take a hit and the price of goods and services would reflect that increase.

[modeladdict]

9 hours ago, 1972coronet said:

Bringing manufacturing BACK to the U.S. would be fantastic ---- if that happens ( Lord willing ) .

That, unfortunately, will never happen. North American car modelers for the most part are notoriously cheap and would never pay the prices U.S. manufactured kits would warrant. 

[1930fordpickup]

If they are after making money in the long run they will keep investing in the different kits that we have not seen in a awhile. I believe that is what these people want, to make money. This should be a better marriage than the last failed attempt was. On the bright side if it is not our stash of 5 dollar kits will double in value. 

[slusher]

This could be a positive thing we do not know every detail of the deal...

[Force]

5 hours ago, modeladdict said:

That, unfortunately, will never happen. North American car modelers for the most part are notoriously cheap and would never pay the prices U.S. manufactured kits would warrant. 

It's not only North American modelers, how many would like to see even higher prices on the model kits wich most likley would be the result if the production would come back to the US, I for one think the prices are high enough as it is, that's what I think but I hope I'm wrong.

I would for sure like to see more production leave China, they couldn't care less about pollution and their manufacturing methods are far from environmetally friendly and will destroy their own land and most of the World if this continues, the rest of the world can try to decrease air and water pollution as much as they want but the enormous pollution China do eats that up faster than we can lower ours, the labor is cheap and the quality of the products are often questionable, that's why they can be cheaper.
They are also ruthlessly copying things not caring about copyrights with government backing as the state owns most of the production facilities, product development in coalition with a China manufacturer belongs to and stays in China according to their thinking even tho' the real owner who ordered and paid for the development of the product is from anywhere else in the World, kind of weird if you ask me.
The government they have...a communist capitalist state ...a weird unheathy combination and that's not a free market, China are also buying up the assets of materials and other stuff in the World and have control of more and more themselves keeping others out.
So I don't like that development when a strong economy like China (2:nd in the World after the US) with the careless reasoning they have will have most of the influence on the World market nothing good can come out of it, and the best is to stop buying China made stuff completely...but that will of course have a price.

Edited January 31, 2021 by Force

[ranma]

It's all about Profit's and nothing more! Labor cost + manufactoring +advertising ect. But lets factor in one complaint about the price of a kit at this time. Min wage in most states is under $9.00 per hour When I started working back in 1987 min wage was $ 5.35 when I stopped to become a 24/7 care taker of my late wife i was just making  Min wage of $ 7.35 and that was in 2010. Now Ohio's Min wage went to just $8.80 per hour. and it's 2021! Kit prices have went above $ 30.00 per kit. Now Model companies in the US don't advertise as they once did. Really when was the last time you seen a fall page add in say a comic book? So that cost would not be much for the company, With Round two most everything they put out over the last few years are from molds that were paid for long ago, Sure it cost to make a new mold we all now that. Here's the point that I'm trying to make while the min wage has stayed low the price of a kit keeps going up, and it's not just model's about everything has gone up. The top 10% of the wealth like their profit's to be very high!

I read somewhere that in 2017 the cost to build a ford focus was about 10% of the suggested retail price. Now that includes the labor, union, and all which came out to $2,500 per car. There for the profit's for both Factory and dealer are good. How much did Ford pay for those Dealership Brochers About $15.00 per in publising cost. The point of this part is Many of the job's that left the US in the 1970's and beyond have claimed that the cost of making it here was to high, But what they wanted was pennie's per hour workers to increase thier profit margin. These same companies pay their CEO's Multi Million dollar bonuses. If anyone remembers the Hostess  down fall The company asked employees to take cut's in pay ect to help save the company, which the employee's did to try and save their jobs. But right after filing for bankruptcy the gave the employee's the pink slip while the CEO got his Multi million dollar bonus. These Companies went to China or Mexico all in the name of profit and nothing more!  Think of it cost Nike just over $5.00 to make that nearly $200 pair of tennis shoes!!!

[stitchdup]

11 minutes ago, ranma said:

It's all about Profit's and nothing more! Labor cost + manufactoring +advertising ect. But lets factor in one complaint about the price of a kit at this time. Min wage in most states is under $9.00 per hour When I started working back in 1987 min wage was $ 5.35 when I stopped to become a 24/7 care taker of my late wife i was just making  Min wage of $ 7.35 and that was in 2010. Now Ohio's Min wage went to just $8.80 per hour. and it's 2021! Kit prices have went above $ 30.00 per kit. Now Model companies in the US don't advertise as they once did. Really when was the last time you seen a fall page add in say a comic book? So that cost would not be much for the company, With Round two most everything they put out over the last few years are from molds that were paid for long ago, Sure it cost to make a new mold we all now that. Here's the point that I'm trying to make while the min wage has stayed low the price of a kit keeps going up, and it's not just model's about everything has gone up. The top 10% of the wealth like their profit's to be very high!

I read somewhere that in 2017 the cost to build a ford focus was about 10% of the suggested retail price. Now that includes the labor, union, and all which came out to $2,500 per car. There for the profit's for both Factory and dealer are good. How much did Ford pay for those Dealership Brochers About $15.00 per in publising cost. The point of this part is Many of the job's that left the US in the 1970's and beyond have claimed that the cost of making it here was to high, But what they wanted was pennie's per hour workers to increase thier profit margin. These same companies pay their CEO's Multi Million dollar bonuses. If anyone remembers the Hostess  down fall The company asked employees to take cut's in pay ect to help save the company, which the employee's did to try and save their jobs. But right after filing for bankruptcy the gave the employee's the pink slip while the CEO got his Multi million dollar bonus. These Companies went to China or Mexico all in the name of profit and nothing more!  Think of it cost Nike just over $5.00 to make that nearly $200 pair of tennis shoes!!!

well put, the owners of the companies sent the work overseas, lots of people blame china for job losses/quality failings but at the end of the day its the companies that put the work to china and made thousands of people unemployed, destroyed local manufacuring or just tried to avoid local enviromental laws. But yeah, lets blame china, when the truth is the reason so much is made in china now is greed. There's definately something wrong when a full time worker still needs help to buy food or pay rent while working min wage, while their company ceo is out buying a new boat/ferrari and avoiding tax. The company owners need to realise that higher wages lead to more spending which means more profits, so everbody wins.