Malibu Boat Company Purchased

I heard from a reliable source close to the Malibu factory team that they were just bought out by another company...any truth??

Old news. Supposedly Bob just opend the company up to more investors (changed it to an LLC) but he is still the majority shareholder.

still curious why this would be funny even if it wasn't old news...

I wonder if Malibu will do a "baseball card" edition, I heard that a trading card company bought them out.

who said it was funny?

uhh this guy

not bought out, just has private investors involved now... Still a private company not controled by public share holders.

wonder why they would need more investment dollars.

The rumor, a while ago was New Brunswick (Mercury)wanted to purchase Malibu but the deal feel through.

(Message edited by nautique226 on August 16, 2006)

Owner didn't want to sway from the core values that made Malibu what it is.

Kudo's to that!!

The other rumor is that the guy that was working for Brunswick in the Sea Ray division left just before helping close the deal with Malibu and accepted a job offer at Correct Craft.

HMMMMMMM!

I know quite a bit about raising capital funding. Whether investment banking, capital investors, angel investors, or investment funds. Depending on which type of investors gave their money will depend on how a company is ran. Only group that doesn't sit on the board and have a HUGE stake in making $$$ is an angle inverstor. In this case I don't think an angel would be used so bet the farm they have a stake in making their money back ten fold. That's the way it works. They recoupe their money one of two ways: Either a public IPO or a buy-off. Their timeframe is usually 2-3 years so look for something to happen in this timeframe. The amount of stocks mean little to these guys because they will slice it up to preferred and common stock. They own the preferred the ower gets the common. In the event ANYTHING happens guess which one gets their money back....yup, the preferred.

I'll not get into a book about this but if you want to know more PM a question and I'll happily answer it.

(Message edited by knwebs on August 17, 2006)

}Just to set the record straight, Malibu has partnered up with a private equity/holding group. While Ken Novotny points out some recap options, he did leave out a holding strategy. Partnering with someone whose strategy is to sell in 2 or 3 years had no appeal to us. The management team has also reinvested in the newly formed LLC, and we own the same class of shares as our new partners. I wouldn’t bet the farm just yet Ken….

There are many reasons it was the right time to do this. One reason relates to estate planning, and another is to create some liquidity and divesture for the Malibu Ownership Team. This process took nearly a year to complete, and was a very thoughtful process for us here at Malibu. In the end, we have investors who are like minded and also understand and value the culture of our company.

There have been no changes to the staffing at either of our factories, and things are as they have always been. The company creed of building the best boats and enjoying our work place will remain our central focus. We have spent too many years building relationships with our dealers and customers to make a change that could jeopardize our reputation and the results of our hard work.

Regards,
Bob Alkema
President, Malibu Boats LLC

Thanks for the details Bob. I'm familiar with Holding company's and how they work. I'm not going to put it into my own words but rather quote the Encyclopedia:

A holding company or parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.

Strictly speaking, the term "holding company" might be used to describe any company that owns a majority of shares in another company. Usually, though, the term signifies a company which does not produce goods or services itself, but, rather, whose only purpose is owning shares of other companies (or owning other companies outright). Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

Here's the link:http://en.wikipedia.org/wiki/Holding_company

Before everyone's eyes pop out of their heads and think this is a bad thing stop because we/I don't have enough information to proceed on this being a good step for us consumers or not.

Basically, a holding company creates value where it didn't exist before. This makes even debt look valuable.

BTW, The definition above is true but really it creates a whole seperate BoD where Bu's is probably unchanged. Don't guess you'll tell us Bob about the other company's in the holding?

Capital gains and dividends along with a way to finiance more debt are the reasons for going the holding company (which is still considered by at least myself as venture capital).

That's all I got, so I guess I'd loose the farm to you Bob unless you're making Bu more attactive on the P/L statement for a sell 2-3 years down the road. I'll not eat crow yet but I've got my calendar ;0).

Oh, and thanks for making wonderful boats love the direction of the company....

Ken,

That’s big of you to contest the Malibu ownership on the restructuring. I would think you would have more respect for the President of one of the most innovative/successful watercraft manufacturers in the industry. I work in the same LOB that you have been discussing and I think many of your comments about angel investors, etc… are a little off. I’m not here to argue with you either, but I believe private equity would be a great strategy for a company that operates in an industry where reputation is so important. I can assure you that if a company such as Brunswick were to buyout Malibu that reputation would quickly deteriorate. I also think the owner’s financial situation is their own business and Bob has been more than fair giving as much info as he has.

I would ask how malibu is one of the most innovative boat compannies out there, but then why bother.... They make nict boats, but i dont think they are innovators.

Thank you, Bob, for your response. It says a lot about how much Malibu cares about its customers (and potential customers) you took the time to respond on Wakeworld. Though I don't own a Malibu, I'm impressed.

(Message edited by eaglejackson on August 17, 2006)

Joe, whether you personally like these products or not I would say the wedge (and now power wedge) is an innovative product. I would also say the Illusion tower is innovative. I am confident that other private companies have made reverse arch towers before Malibu did (bigger boats, yachts and the like)... However one thing i do know is that Malibu does sell them and has been selling them as an OEM part. And FWIW I do not own a Malibu (Nautique owner) either but i can appreciate what they do in the marketplace.

Sorry to all reading if you think my post was to challenge Bob because that was not my intent. I think the post in the beginning was asking about rumors after Bob got on here and set the rumor straight I was only hoping to further the details about the definition for clairification to those who aren't familiar with this these types of business tools.

I apologize again if my content came across like it was opposing what's going on with Bu!

Good discussion. I truly appreciate the fact that Bob took some of his valuable time to respond in this forum...many thanks! I also value Ken's insights as he seems to have a great deal of knowledge on the subject.
The word on the street was that The Topps Company, Inc., (TOPP), was the entity that purchased Malibu. I guess I still don't know the private equity/holding group that partnered with Malibu...maybe sharing this information might either erode or instill consumer confidence...I just don't know. As a major player in the wakboarding market, I trust Malibu partnered to become a stronger brand-

did you catch the estate planning reason. makes a lot to sense to me. you have a very successful company and the owners need liquidity for estate reasons. come on, uncle sam is gonna take a huge chunck of estate taxes when the owners die, you gotta plan way ahead for that stuff.

Thank you Bob for chiming in. For all the posts speculate and hear rumors it is good to have the record set straight. Additional owners or not, WHO CARES? As long as the boats are still high quality and the employee's still love to build boats the consumer will always recieve a great product. Bob, keep up the good work.

Him setting the record straight also says alot for this forum. Even the president of one of the largest inboard boat manufactuers in the industry reads and puts in his two sense when need arises. Now that is cool.

Bob- Can I have a free boat? Please

To further clear the air, the folks who have partnered with us are Phil Estes and Jim Shorin of Horizon Holdings. Their web site is www.horizonholdings.com if you would like to know more about them.

Regards,
Bob Alkema
President, Malibu Boats LLC

P.S. No free boats Matt.....

Wow, for as much assets they must have, they didn't spend too much on their website.

fb, Sometimes bling is just bling...understand???

Good discussion on this one. Let me further elaborate on Bob's postings to help clear the air on this subject. My firm, Horizon Holdings (www.horizonholdings.com), and our colleagues at Black Canyon Capital (www.blackcanyoncapital.com) have partnered with Bob and his team to recapitalize Malibu, and we are just thrilled to be investors in their company. We have backed Bob and the Malibu management team for the long term to continue to do what they do best...to make the best boats and to have fun doing it. Bob and his team will continue to lead the company, continue to support Malibu's customers and dealers, and continue to develop innovative new boats and accessories just as they have for the last 25 years. As a lifelong boater and active waterskier, wakeboarder, and watersports enthusiast, I have followed this industry generally and Malibu specifically for more years than I care to admit. As a result, you might imagine this is a dream situation for my colleagues and me, and we are elated to have the opportunity to support Bob and his team.

Matt...if it helps you any, I have to pay for my boat, too.

fb...Not sure I will have a chance to work on our humble website until summer is over, but I appreciate you not giving us grief about the goofy picture...

Mr. Alkema and Mr. Estes,
The whole watersports (and specifically Malibu) world appreciates your candid presentation of these details. Thanks for clearing things up. It is much better to hear the real story, straight from the horse's mouth instead of the persistant rumor-mongering that tends to occur on the internet.

All of us at http://www.theMalibuCrew.com have been anxiously tracking this discussion (as well as interpreting it on our own here and here).
We would be honored for you to check out or participate in duscussion there as well.

Thanks again for everything (great boats, great customer service, and great enthusiasm),
Jonathan

(Message edited by wakeandsno on August 19, 2006)

Nice to see the VC and Cash Flow crowd actually post on a enthusiasts site, definitely sets a standard you don't see often. Very rare.

I must say that I am very impressed with the responses here on wakeworld. I didn't get to meet Bob when I toured the plant in Merced but the general feeling the I got from the tour is that working for or with Malibu is like a family. Seems like most of the employees have worked there for many moons. I actually ran into a guy today with a Malibu Factory Tour Shirt on. That is amazing since I live in Dallas, Texas. He had also toured the plant. I see nothing wrong with pusuing greater investments and creating a broader network to sell more quality boats. I think that this deal will help all of us, the consumer, owners and investors.

Bob and Phil: Great to hear from real people. It has always been difficult for boat owners to put a face on the companies they do business with. Thanks for clearing up rumors and innuendo, and thanks again for a quality product. I am not the financial propeller-head others on this site seem to be, but I know a good product when I buy one.

Interesting… but at the end of the day, the ownership and corporate structure of Malibu Boats, has substantially changed.

As Mr Estes’ web site states; they work closely with the management to “(i) develop a sound, growth-oriented business plan, (ii) put in place comprehensive financial controls and to ensure accurate, timely financial reporting, (iii) develop and promote a culture of prudent risk-taking by key Company decision-makers and (iv) maximize the value of each investment.

Given the prior structure and culture of Malibu it will be interesting to see how the present management team works within the closely monitored discipline required by Horizon.

Time will show whether Bob Alkema is comfortable going from “Big Dog” to “Little Poodle”.

I've done a bit of estate planning in my day. I can remember when I first got started in my practice, I was thrilled to be in a profession that was relatively static!!!! Little did I know...anyway, this scenario is pretty common place these days. I know it may sound rather esoteric to the layperson, it really isn't.

Many different estate planning strategies can be used to eliminate or, at the very least, significantly reduce estate taxes, ensuring the family's wealth is passed on to the next generation. One such strategy involves transferring business interests to the family through the use of a limited partnership (LP) or a limited liability company (LLC). Parents transfer to their children "discounted" shares in their LP or LLC, without giving up control of the business.

Parental control of the business is ensured in the LP because limited partnership interests are transferred to the children, while the parents retain the general partnership interest (limited partners may not participate in the management of the business). Historically, the LP has been used in estate planning strategy because of this attribute.

Today, the LLC can be used to accomplish this same purpose, but with all of the owners having limited liability for the business's debts. An LLC can be structured as a "member-managed" entity, wherein all of the owners participate in management, similar to the partners in a general partnership. However, the LLC can also be formed as a "manager-managed" entity, wherein the owners who are also the managers control the business, while the owners who are not managers act in a capacity similar to limited partners. In short, the "manager-managed" LLC is well suited to accomplish this estate planning objective.

Parents can transfer ownership interests, in the form of non-voting non-manager interests, to the children without giving up control of the business. In the immediate future, many estate planning practitioners will continue to use the LP in employing this estate planning strategy, because a body of favorable case law has built up over the years supporting the use of the LP for this purpose. However, many practitioners are already embracing the LLC as a better alternative to the LP, because all of the owners of the LLC enjoy limited liability.

The small business owner should consider creating a manager-managed LLC at the outset, even when the owner does not anticipate immediately making transfers. This can be done even in the one-owner LLC, in anticipation of the possibility of transferring interests some time in the future. This eliminates the need, in the future, to make amendments to the articles of organization and operating agreement, which would be necessary had a member-managed LLC been created.

If a holding entity and an operating entity are created, it is important to use this strategy when structuring the holding entity, which will own the bulk of the assets, as well as own the operating entity--which is the entire wealth of the business. Thus, the operating entity may then be a member-managed or a manager-managed LLC, with the holding entity as the only owner.

When the owner directly creates and owns both entities, each entity should be manager-managed. Clearly, having the holding entity own the operating entity simplifies this strategy.

It is clear that the most effective strategy involves transferring business interests to the next generation, before the interest become especially valuable. The more valuable the interest, the more difficult it becomes to make the transfers, while still preserving the $1 million exemption.

Not being a party to the planning, I don't know, there may be more than meets the eye, here, but from a strict estate planning device, it's almost mundane these days.

(Message edited by surfdad on August 27, 2006)