Wiggle have been bought

phreak

Wiggle, the online cycling retailer, has been acquired by the private equity firm Bridgepoint in a deal worth £180m.

http://www.independent.co.uk/news/busin ... 73795.html

Interesting move. Hope it doesn't see their service fall. Private equity firms don't have the best reputation for these sorts of things.

t4tomo

at 18x pre tax muliple they are certainly expecting some growth out of it.

GiantMike

t4tomo wrote:

at 18x pre tax muliple they are certainly expecting some growth out of it.

What does this mean? What's a pre-tax multiple?

phreak

Think it means they earned around £10million profit last year, so the purchase price is 18 times their annual profit. I'm no expert, but in investing you have the Price/Earnings ratio, which is roughly speaking the value of the company divided by earnings.

A ratio of any between 15-25 is apparently good. Wiggle's is 18.

bompington

Oh dear, now who are we supposed to blame?









sorry, someone had to

rick_chasey

Pretty sure they own Pret too.*



*Or at least have a significant stake

GiantMike

Rick Chasey wrote:

Pretty sure they own Pret too.*

*Or at least have a significant stake

Pret don't do steak. They're more into sandwiches.

Yossie

phreak wrote:

Wiggle, the online cycling retailer, has been acquired by the private equity firm Bridgepoint in a deal worth £180m.

http://www.independent.co.uk/news/busin ... 73795.html

Interesting move. Hope it doesn't see their service fall. Private equity firms don't have the best reputation for these sorts of things.

Negative young Ghostrider - P/E firms are generally in it for the medium/short long term: 3 -5 years. The are in it to invest at the best price, get maximum return and get out having earnt the maximum profit to repay their committed investors.

They need the company they have bought to earn maximimum return, so will not affect its retail side: why would they put money in then shaft itself? To sell it on it needs to have a secure financial trading base, minimal losses, minimal debt, minimal leveraging, all that jazz.

Anyway, Wiggle was sold to Bridgepoint by ISIS, so no real change in ownership structure or management. It looks like it was a friendly sale as well, so no harmful management exiting or bad will involved. At the end of the day, most of the investors in ISIS are probably the same guys who have invested in Bridgepoint, so its really robbing Peter to pay Paul.

Bridgepoint are players as well - not up there with the CVCs of this world, but pretty darn big nontheless.

Don't get P/E firms mixed with vulture firms - two completely different kettles of fish. Vultures are there to pick over the carcasses of dead and dying business, strip the assets, get shot of the remains.

The return ratio is all really, really freakin' complicated : its all EBITs multiplied by profit returns dependant on leveraging, returns to committed investors, that sort of stuff: unless you work in the P/E industry its just countless unfathomable ratios.

P/E is risky but does offer fabulous returns. Its not always bad, its just the way business is.

Practically everything is owned by venture capital and private equity firms nowadays, so this isn't surprising at all really.

Anyway, I bet Bridgepoint got a huuuuuuge bag of Haribo out of that one.

nevman

Wiggle arent the cheapest but deliver on service-lets hope the business plan isnt pile high and sell cheap and sod the customers like some retailers we all know.Hope Bridgepoint are watching.

Yossie

nevman wrote:

Wiggle arent the cheapest but deliver on service-lets hope the business plan isnt pile high and sell cheap and sod the customers like some retailers we all know.Hope Bridgepoint are watching.

I genuinely doubt it will be: B/point will have looked at the current business model, assessed the demographics of trade and seen what sector of the market Wiggle appeal to: its all in their documentation they issue pre investment - private placement memorandums and that sort of stuff. Essentially they break down every single part of the market, the past dealings, the predicted future, how the business /management model works, competitors, synergies - Wiggle ties quite nicely into Fat face that they also own, so don't be too surprised to see Fat Face stuff popping up in Wiggle - the current management style, production lines, full SWOT analysis, all that jazz.

Then they go into the financials. All deeply dull unless you really have to know what its all about. Even then its pretty dull.

They know that if they go for pile high/sell cheap they will lose their core market (the more cultivated shopper), lose profits, lose future sales earnings, stuff themselves in their own pockets. If they wanted that they would have bought Ribble or any of the other 200 on line retailers.

These guys aren't amateurs and £180 million or whatever they paid, although it isn't exactly big money (in fact its really small - it's what you'd pay in due diligence on a big deal) is still a (small) bit of wedge in today's tight P/E markets.

rick_chasey

Yossie wrote:

These guys aren't amateurs and £180 million or whatever they paid, although it isn't exactly big money (in fact its really small - it's what you'd pay in due diligence on a big deal)markets.

Unless you're RBS obviously.

Yossie

Due diligence lite ?

rick_chasey

(after actually knowing what it mean), it makes my draw job every time I think about it.

Yossie

Rick Chasey wrote:

(after actually knowing what it mean), it makes my draw job every time I think about it.

Exactly which part? The sheer buffoonery involved in the ABN deal? It is actually quite shcoking.

rick_chasey

Yossie wrote:

Rick Chasey wrote:

(after actually knowing what it mean), it makes my draw job every time I think about it.

Exactly which part? The sheer buffoonery involved in the ABN deal? It is actually quite shcoking.

Pretty much.

izza

Rick Chasey wrote:

Pretty sure they own Pret too.*



*Or at least have a significant stake

Does this mean the end of the Haribo's? Will we get slices of bread instead?

Stone Glider

You have already noted that Wiggle have eased off the price competitiveness of old and rely on discounts plus excellent service. That shift will continue as this set of owners (much like the last set) will squeeze to maximise profits.

This is not clever stuff, although being done by clever people. Private equity enjoys a quieter business environment, thanks to less statutory scrutiny and pays little tax, thanks to smoke and mirrors. Give it three years and the husk will be flogged off to the credulous.

Yossie

Nah - Wiggle lost the price competitiveness years ago - I used to use them all the time because they were the cheapest (or comparable) with the best service.

I then had to go away for a while and when I got back found that their prices had risen massively but the excellent service was still there.

Essentially I view them as the Demon Tweeks of cycling: the best service out there and a fantastic range, but not the best on price. But any problems you have they will sort asap, whereas Ribble blow them away on price but the service, comparatively, is bobbins (but at least they delive in nice re-cyclable boxes now).

The new owners kow their core demographic (and with Fat Face in their portfolio have en eye for the more affluent consumer) expect things to not change a lot.

NWLondoner

I just wonder how wiggle will cope now they have lost Focus Bikes. This did make them stand out from the rest with an exclusive deal with a superb quality bike range


Chain Reaction and Pro Bike Kit have better prices and the same if not better service than wiggle.

Yossie

NWLondoner wrote:

I just wonder how wiggle will cope now they have lost Focus Bikes. This did make them stand out from the rest with an exclusive deal with a superb quality bike range


Chain Reaction and Pro Bike Kit have better prices and the same if not better service than wiggle.

PBK blew it ages ago - too expensive, rubbish service

And what's happened to Parker? they are now really shockingly awful.

CRC I agree 100% - excellent prices, excellent service.