Collectors (PSA) Acquired SGC

[cgjackson222]

I'm not saying beer is analagous to card grading, but I'm hoping that this is sort of like InBev or one of the big guys buying a craft brewery and not changing the recipes (diluting them with corn or rice instead of barley, etc.)

If it is true that Collectors tried to buy SGC multiple times in the past, but failed, I wonder what, if anything, changed this time?

Was it just more money? Was it that Peter sees the writing on the wall and that card grading (like beer) may have topped out and selling in the future would not be as profitable?

Or could it be that SGC got better terms? For instance, a guarantee that SGC could continue on without much interference, or that it would even get an infusion in cash to make improvements? This is probably just wishful thinking on my behalf, but everyone can dream.

[gunboat82]

Originally Posted by cgjackson222

I'm not saying beer is analagous to card grading, but I'm hoping that this is sort of like InBev or one of the big guys buying a craft brewery and not changing the recipes (diluting them with corn or rice instead of barley, etc.)

I saw your AB InBev analogy and had a fleeting twinge of optimism. But then I remembered that they stopped making Bourbon County Coffee Stout in 12-oz. bottles, and the price per ounce nearly doubled.

[bk400]

The terms of Collectors' purchase would tell us a lot, but unlikely that much will be disclosed publicly given that both the buyer and the target are private companies with private shareholders.

I would think that PSA is really "buying" SGC's loyal customer base. It wouldn't surprise me if PSA saw data in their due diligence that suggests that SGC devotees are unlikely to submit to PSA as a general matter.

As such, if the deal is announced and SGC customers flee en masse to PSA, PSA probably wouldn't care so much. But if they hate PSA and flee to CGC or Beckett, PSA would look like a muppet.

So, I wouldn't be surprised if there are conditions in the deal that link the price that the SGC shareholders ultimately receive to the financial performance of the SGC unit over a certain time period -- maybe 1 year.

If this is the case, I wouldn't be surprised if you saw over-grading at SGC during this 1-year period.

[Schlesinj]

I would think Collectors is going to go public. Gaining more market share, revenues/employees/locations in a similar market. Yes they will have some redundancy in certain spots, but the added value is easier multiplied under their platform in certain areas (as communicated).

I do think added locations and skilled employees really matters here. I am sure some of us are in the current business world finding new eager employees committed to learn is much harder these days specifically with a unique skill set of reviewing cards. Our by far biggest turnover is 20-25 year olds. Is it a combination of new mindset about your job, COVID, work from home etc.

I know with my business we are constantly looking to acquire a small business to add to our platform. It usually is a winner for both sides.

Back to this topic I will wait to pass judgment, but these guys are all smart I have to think they will use the metrics and make smart decisions to enhance the platform and hopefully satisfy the end user.

[brunswickreeves]

It would be great is PSA set up additional operations capacity at SGC HQ in FL to cut down 4 days of round trip travel time for those submitting to PSA from the East Coast. This would improve UX and also take some burden off the CA operation.

I also wonder what the electricity cost is to run grading slab machines in FL vs CA. If significantly less expensive in FL, with PSAs crushing volume, they could save a lot of money by operating in FL with SGCs existing infrastructure.