Round 2 purchased by an investment firm

[Dave Van]

This investment firm has a record of buying into companies to make a profit......they do not have a history of cut and run tactics. That is no guarantee of what will happen.....but I hope a signal of what to come. 

[BlackSheep214]

Good or bad depending on the product.

Look What happened to several retail stores... Hess's became Kauffmann's, Kauffmann's bought out by Macy's, and now Macy's are closing it doors for good. Each of these stores has been in existence for a few years before being bought out by other corporations.

In my eyes, investment firms = corporate raiders.  Nothing good ever comes out of it. It doesn't matter if one person knows the hobby or not. Majority of the board of directors have the final say in decisions what direction it wants to take it.

In all honesty, a company like Revell would been a better fit to buy them out, not investment firms with no knowledge of the hobby. 

Nobody really knows what their plans are for Round 2 as a business at the moment. Will they continue to manufacture / distributor for model kits or will they do away with it and concentrate on the collectible genre craze?

The better question is why Round 2 is being bought out by another firm? Is Round 2 really in that deep financial trouble than they let on? Nobody knows.

I'd rather take the wait and see route than feel all confident it will be better in the long run. 

[Rob Hall]

32 minutes ago, BlackSheep214 said:

Good or bad depending on the product.

Look What happened to several retail stores... Hess's became Kauffmann's, Kauffmann's bought out by Macy's, and now Macy's are closing it doors for good. Each of these stores has been in existence for a few years before being bought out by other corporations.

 

Not really comparable, though...physical retail stores in malls are an obsolete concept from the past.    They didn't adapt to the internet age and died (and the events of 2020 didn't help either). 

Edited February 1, 2021 by Rob Hall

[mikemodeler]

1 hour ago, BlackSheep214 said:

Good or bad depending on the product.

Look What happened to several retail stores... Hess's became Kauffmann's, Kauffmann's bought out by Macy's, and now Macy's are closing it doors for good. Each of these stores has been in existence for a few years before being bought out by other corporations.

In my eyes, investment firms = corporate raiders.  Nothing good ever comes out of it. It doesn't matter if one person knows the hobby or not. Majority of the board of directors have the final say in decisions what direction it wants to take it.

In all honesty, a company like Revell would been a better fit to buy them out, not investment firms with no knowledge of the hobby. 

Nobody really knows what their plans are for Round 2 as a business at the moment. Will they continue to manufacture / distributor for model kits or will they do away with it and concentrate on the collectible genre craze?

The better question is why Round 2 is being bought out by another firm? Is Round 2 really in that deep financial trouble than they let on? Nobody knows.

I'd rather take the wait and see route than feel all confident it will be better in the long run. 

If you haven't studied the history of the model companies, I suggest you do a little research and see their storied past. Several have come and gone while others have survived. Many private equity firms buy companies for various reasons, some to salvage what can be bought at a bargain, some because they see value and profit potential.

Comparing brick and mortar retail operations to a plastic model making company is about as far off as one can get. 

 

As I said before, why speculate and claim the end is near when you can wait for the official company announcement later this week? Maybe you will hear positive news or you will hear negative news, but at least it will come from the company itself and not a bunch of internet opinions from various forum members.

[randyc]

On 1/31/2021 at 7:12 AM, stitchdup said:

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.

I think this is an unwinnable debate.   I typed out a reply, which just ends up going nowhere.  I deleted it.   I mostly agree with you, especially up until the last sentence.   Just not completely.   I am all for workers making a living wage.   Just not sure how that will translate to increased spending and profits when prices will have to rise to cover the wages.  It's a great idea.   Just in my mind it doesn't work like yours.   I hope YOU are right, though.  And that CEO thing is dead nuts correct.  

 

 

[niteowl7710]

5 hours ago, BlackSheep214 said:

In another forum I belong to have zero confidence in this news & I agree with them. You migjt as well say goodbye to them in a few years. Just stock up on kits while you can before they tank.

Nothing good every comes out of it when investors have zero knowledge in the model industry.

What is it with you people actively willing the American Car section of the hobby into a grave?  Frankly at this point, having heard about the demise of the hobby since I was a kid in the 80s, I kinda wish it would happen already so you folks could take your long in coming victory lap and then be left to find some new thing to ceaseless whine about, while also never having any more models to buy.  I find some speculation while we wait to be a fun thing...What could an infusion of capital bring in terms of more new tooling?  Could Round2 buy Moebius off of Pegasus since that's been an all but useless pairing since that sale? Could Round2 buy Revell US off of Blitz?  Ya know fun...at least semi-positive thoughts and hopes.  But NOOOOOOOOOOOOOOOOOOO! The type you are peddling isn't even speculation, it is rumor mongering of the worst and most extremely negative kind.

P.S. Only 10 of the Hess's were sold to Kauffman's, the rest were distributed to 4 other regional and now also defunct department store chains.  The only ones still open are the ones that became Dillard's in the Southern U.S.

Edited February 1, 2021 by niteowl7710

[BlackSheep214]

5 minutes ago, niteowl7710 said:

What is it with you people actively willing the American Car section of the hobby into a grave? 

Thats not my intention and I apologize if you assumed that. After Squadron went belly up, just concerned what these corporate raiders.... er... investment firms' real intention is whether they're doing something good for this great hobby or not. Why wait til next week for their "official" announcement. Why not now?

[sfhess]

[tim boyd]

Round 2 Press Release, received in my email at 2:42PM, EST, 1 February 2021:

ROUND 2 PARTNERS WITH PRIVATE EQUITY GROUP South Bend, IN (Feb 1, 2021) – Round 2, a leading collectibles company that produces model kits, die-cast cars and slot cars announced today that it has partnered with Praesidian Capital. Praesidian Capital is a leading private investment group headquartered in Larchmont, New York and acquired controlling interest (51%) of Round 2.

Round 2 President and Founder, Thomas Lowe stated, “I’m thrilled to be partnering with the Praesidian team as they will bring significant resources as we continue to scale the business, both organically and through acquisitions. It’s also really great that there are no staff changes and the headquarters remains here in South Bend, IN. Our customers can be assured that it is business as usual at Round 2, with lots of continued growth to come.”

“We are excited to be partnering with Thomas Lowe, founder and CEO of Round 2,” stated Jason Drattell, Praesidian Founder. “Round 2 has emerged as a market leader in the collectibles space and we look forward to supporting the management team as Round 2 continues to expand its product offerings”

Glenn Harrison, Praesidian Capital Partner said: “Product design and innovation will always be at the core of Round 2’s growth strategy, but we also believe that there is a significant consolidation opportunity within the highly fragmented collectibles space. We will be working closely with the Round 2 team to continue to build on its already impressive list of brands.”

Stay tuned for more continued product updates and news at round2corp.com!

# # # ABOUT ROUND 2 CORP., LLC Round 2, LLC is an innovative collectibles and toy company located in South Bend, IN. The creative team at Round 2 is dedicated to producing detailed, high quality collectible and playable items appealing to the young and young at heart. Round 2 brands include Polar Lights®, AMT® and MPC® model kits. Auto World® slot cars, Forever Fun™ seasonal products and the licensed brands Johnny Lightning, Racing Champions, Legends of the Quarter Mile, American Muscle®, Ertl Collectibles® and Vintage Fuel™ die cast. For more details on all the product lines produced by Round 2, visit our website at: www.round2corp.com American Muscle, Johnny Lightning, and Racing Champions are the trademarks of TOMY, registered in the U.S., Canada, and other territories. Ertl Collectibles is the U.S. registered trademark of TOMY.AMT, Polar Lights, MPC, Lindberg, Hawk Round 2 and design are trademarks of Round 2, LLC. ©2021 Round 2, LLC, South Bend, IN 46628. All rights reserved. Media Contacts Round 2 Public Relations

[1972coronet]

35 minutes ago, tim boyd said:

Round 2 President and Founder, Thomas Lowe stated, “I’m thrilled to be partnering with the Praesidian team as they will bring significant resources as we continue to scale the business, both organically and through acquisitions. It’s also really great that there are no staff changes and the headquarters remains here in South Bend, IN. Our customers can be assured that it is business as usual at Round 2, with lots of continued growth to come.”

It is from my life-long Blue Collar experiences that my cynicism is bourn . I've found that typically the opposite is true ( e.g. , "no staff changes" , "headquarters not moving" , "business as usual"  are patronising platitudes employed to quell management and staff ) .

I hope that my (practical application-based) cynicism is unfounded...

" Living in a jungle

it ain't so hard

Living in the city

it will eat out , eat out your heart . "

 

Edited February 2, 2021 by 1972coronet

[Tom Geiger]

10 hours ago, BlackSheep214 said:

In all honesty, a company like Revell would been a better fit to buy them out, not investment firms with no knowledge of the hobby. 

The better question is why Round 2 is being bought out by another firm? Is Round 2 really in that deep financial trouble than they let on? Nobody knows.

Revell is owned by (drumroll please!)  a private equity firm!   One that like Praesidian Capital that has a record of growing businesses!

I see that Chicken Little has reared his ugly head once again...

And why does Round 2 need money?  For growth!  All I've ever heard from Round 2 employees and in everything I read is that they don't have the band width (read that money and people) to do everything they would like to do!   

They do business with the likes of Walmart, who pays vendors net 120.  Their whole business is based on store sell through in 30-60 days, and paying vendors in 90-120 days. Basically, everything you see in Walmart is still owned by the vendor who sold it to them!  They have 11,500 stores. Figure you have $10,000 in inventory in all of them, that means you need a bankroll of $115 million for just that one activity...  So you have an opportunity to do more business with Walmart.. which is money in the bank... 3 to 4 months in the future!   That takes money to bankroll.   And that's probably the situation!

 

[Dave Van]

Hobbies are making money right now. That's why the big two model companies are owned by investment firms.  Most of my grandkids have given up computer and phones and are DOING things. LEGO, painting, making doll clothes.....even a few model cars in there. It's a GREAT thing even if not plastic models. Let's stay positive. 

[Motor City]

"a leading collectibles company that produces model kits, die-cast cars and slot cars"

Notice that kits are listed first, whether that be model cars, Star Trek or Star Wars.  I expect sci-fi models to continue doing well in sales, so more money will be invested there.  If model car and truck sales do well,  money will also be invested there.

"the Praesidian team ... will bring significant resources as we continue to scale the business"

I take that to mean Praesidia is willing to invest capital in the business to grow market share by adding more product in a shorter time frame than Round 2 has.

"we also believe that there is a significant consolidation opportunity within the highly fragmented collectibles space. We will be working closely with the Round 2 team to continue to build on its already impressive list of brands.”

I would expect Praesidian to purchase tooling or entire companies to be the undisputed models market leader if their expected business model pans out.  I think this is great news for all of us.

[Reegs]

13 hours ago, 1972coronet said:

It is from my life-long Blue Collar experiences that my cynicism is bourn . I've found that typically the opposite is true ( e.g. , "no staff changes" , "headquarters not moving" , "business as usual"  are patronising platitudes employed to quell management and staff ) .

I hope that my (practical application-based) cynicism is unfounded...

" Living in a jungle

it ain't so hard

Living in the city

it will eat out , eat out your heart . "

 

Second that.

Also: "we also believe that there is a significant consolidation opportunity within the highly fragmented collectibles space." Wuzzat mean?

[Curt]

2 hours ago, Reegs said:

Second that.

Also: "we also believe that there is a significant consolidation opportunity within the highly fragmented collectibles space." Wuzzat mean?

Sounds to me like they are considering other acquisitions within the collectibles space if they are talking about Round 2 building on their brand.

[Dave Van]

Tom Lowe knows how to make money. He brought back the Johnny Lightning brand after it was abandoned, and built it into the R2 we know today. With more cash I think he can do more.....we'll have to wait and see.   

[Dragline]

It sounds like a great kick in the pocketbook for Round 2. I wish them well and hope to see things we can only dream of now in the near future. Atlantis is doing great things with what they bought if the list of kits to be released this year is any indication of.

The naysayers are unhappy people, let them be so.

[GMP440]

 

I appologize if this is redundant.  This was in Fine Scale Modeler.  What's interesting is the last three paragraphs.  Could be a good thing for us.  Hope it's true that Round 2  will create more new model car tooling.  With this investment being pumped into Round 2 we could very well see highly requested kits come to fruition alot sooner. 

 

 

In the same press release, Jason Drattell, Praesidian founder, said the investment firm recognized Round 2 as a "market leader in the collectibles space" and will support the management team as the company "continues to expand its product offerings.” Glenn Harrison, a Praesidian Capital partner remarked Praesidian sees a "significant consolidation opportunity within the highly fragmented collectibles space." 

Round 2 announced last week that it had acquired a license to produce Star Wars model kits, adding to the growing list of high-profile brands its working with, including Hot Wheels, Hasbro and Monopoly, and James Bond. According to Chad Reid, a Round 2 spokesperson, modelers can anticipate Round 2 to approach the Star Wars license similarly to the other science-fiction kits it produces. 

“That means we will be re-popping old kits and tooling new stuff,” Reid said. Round 2 looks to bring the first Star War reissues to market in late summer or early fall. The exact lineup has yet to be determined.

Additionally, Round 2 expects to create new molds in many of its legacy brand categories, including cars. With the ink on the deal barely dry, the company in the midst of planning where they’ll focus first for new tools. 

When asked if Round 2 was looking to grow more into the pre-finished collectibles space, Reid said it was “business as usual” for now with a concentration on growing current product lines.

“As we grow, we may look into other brands that would fit under the Round 2 umbrella, but all of that will be in due time,” Reid said.
 

[keyser]

On 2/2/2021 at 12:06 PM, Dragline said:The naysayers are unhappy people, let them be so.

Quoted for truth. ?

[keyser]

On 2/2/2021 at 12:06 PM, Dragline said:

The naysayers are unhappy people, let them be so.

Quoted for truth ?

Edited February 3, 2021 by keyser
That was weird.

[bobthehobbyguy]

A couple of observations. One I've heard lots of complaints that why doesn't Round 2 do any all new kits. We're tired of constant reissues. Well its commented in the press release that new car kits will be possible.  We need to be positive about this.

Second we complain about everything being made in China.  We also need to take some of the blame. There was a time where we could have voted with our wallets and bought made in USA however we went for the cheapest. We've done the same thing to hobby shops.  We buy from Walmart , Michaels and other big retailers and have put most of the hobby shops out of business.  Sometimes the cheapest isn't always the best.

[Khils]

33 minutes ago, bobthehobbyguy said:

A couple of observations

    "I"        concur Completely!!

[Force]

On 2/4/2021 at 3:37 AM, bobthehobbyguy said:

A couple of observations. One I've heard lots of complaints that why doesn't Round 2 do any all new kits. We're tired of constant reissues. Well its commented in the press release that new car kits will be possible.  We need to be positive about this.

Second we complain about everything being made in China.  We also need to take some of the blame. There was a time where we could have voted with our wallets and bought made in USA however we went for the cheapest. We've done the same thing to hobby shops.  We buy from Walmart , Michaels and other big retailers and have put most of the hobby shops out of business.  Sometimes the cheapest isn't always the best.

I couldn't agree more.
Lets see what will happen, I'm not negative in this because something good could come out of it.

Edited February 5, 2021 by Force

[BlackSheep214]

On 2/1/2021 at 1:39 PM, sfhess said:

Not being negative at all. Nor am sounding like a naysayer. Just being cautious on this news whether or not they will make good on their word. I've seen things go the opposite direction a few times. Squadron is one good example. 

[niteowl7710]

10 hours ago, BlackSheep214 said:

Not being negative at all. Nor am sounding like a naysayer. Just being cautious on this news whether or not they will make good on their word. I've seen things go the opposite direction a few times. Squadron is one good example. 

Squadron's problems were the same that befell Hobbico. At some point they lost vision of what their core business(es) were and became all about leveraged acquisitions of other companies to attempt to be a jack of all hobby trades and a master of none. Did investment capital come in and sell off everything of value, sure, but Squadron had been slowly imploding for a decade and outright dying for the past several years. I know they hold a certain nostalgia feels for a lot of people back when they were THE mail order and brick and mortar place to be, but that ended quite awhile ago. They never pivoted in a meaningful way to eCommerce, their website was a hot mess more than it wasn't, they never had anything in stock and when they did it was almost always Hobby Lobby levels of MSRP over priced. Even the last weekend fire sale before they closed, the 70% off wasn't enough to pull some Tamiya kits down below the price you could buy them for in Japan.

Edited February 6, 2021 by niteowl7710