Blackstone acquires CCG

[Aquarian Sports Cards]

Remember when the American dream was to start a business, create good jobs for people that you wound up considering family, and if you were lucky maybe pass it on to the next generation?

Now it's start a business, get big enough that some corporate megalith wants to swallow you, and make you obscenely rich in the process, while not actually giving a crap about employees or customers because they are so big they feel they don't have to.

https://www.marketwatch.com/story/bl...p-271625149366

[Hankphenom]

I'm guessing they see a huge opportunity in going after the bloated monopoly PSA.

[mechanicalman]

The premise of your argument is pretty flawed. This is a private equity investment, meaning they will likely hire more people (creating more good jobs in your words) and invest in more and better services to fuel growth. If some entrepreneurs get wealthy in that process, why begrudge them? I think the idea of running a business until you retire or pass it along to (odds are, dysfunctional heirs) is a pretty antiquated version of the American dream.

[oldjudge]

Sam, I completely agree with you. Having said that, I think this was a bad move by Blackstone. The strength of PSA isn’t their grading quality; they are no better or worse than other graders. Their bedrock is their registry. I know the Blackstone guys are a lot smarter than me, but I don’t see how you crack this. Without a viable registry platform to compete with PSA I think you just become another grading company. I think they would have been smarter to buy SGC. At least that way they would start with a registry base, albeit a very flawed one.

[mechanicalman]

Originally Posted by oldjudge

Sam, I completely agree with you. Having said that, I think this was a bad move by Blackstone. The strength of PSA isn’t their grading quality; they are no better or worse than other graders. Their bedrock is their registry. I know the Blackstone guys are a lot smarter than me, but I don’t see how you crack this. Without a viable registry platform to compete with PSA I think you just become another grading company. I think they would have been smarter to buy SGC. At least that way they would start with a registry base, albeit a very flawed one.

Jay, I hear you. I was very surprised by the $500mm valuation. My guess is that their comic and currency/coin business is the driver of valuation. But there’s so much PE money out there right now - I wouldn’t be surprised if they paid a heavy premium.

[Peter_Spaeth]

Originally Posted by mechanicalman

Jay, I hear you. I was very surprised by the $500mm valuation. My guess is that their comic and currency/coin business is the driver of valuation. But there’s so much PE money out there right now - I wouldn’t be surprised if they paid a heavy premium.

I don't know the profit margins on the coin grading side, but TONS of brand new coins get sent in to NGC for grading.

[yanks87]

CGC is the gold standard in the Comic Book realm, so it makes me wonder if the addition of CSG was to "round out" their offering in order to entice a buyer. I am putting my business up for sale if anyone wants to buy a one man design shop....wait a minute, that means I would have to keep working, just for someone now. DAMMIT, I did this all wrong.

Maybe I should start a grading company. 2 grades, Yes (it's a card) No (it's not a card). I'll be sure to get a flashy sticker for my grades, and stupid wait times for grading as well as ever increasing submission costs (they just went up) and I will be rolling in the cash in no time.

[CK]

PE investments by nature are made with the exit plan in mind. It can be a roll up of similar businesses to create a new juggernaut or to entice larger players to take a swing at a major acquisition at some point in the future.

I’d say the plan is to improve sales, lower operational costs, and enhance investor value in the short term before this company realizes it’s next, or potential final, resting place.

The investors listed in the OP’s link are money men, plain and simple. As an example of worlds colliding, I received recent PSA submissions back in an advertising box for StockX. If you’re unfamiliar, StockX is a company who started out trading limited release sneakers. They’re now dabbling in selling trading cards, Louis Vuitton bags, T-shirts, and Rolex among other luxury brands.

[Casey2296]

I bought Blackstone at 45, it's currently 90, I'll probably let them pay for an overpriced Ty Cobb in a current auction that I want for my collection.

[glynparson]

Originally Posted by mechanicalman

The premise of your argument is pretty flawed. This is a private equity investment, meaning they will likely hire more people (creating more good jobs in your words) and invest in more and better services to fuel growth. If some entrepreneurs get wealthy in that process, why begrudge them? I think the idea of running a business until you retire or pass it along to (odds are, dysfunctional heirs) is a pretty antiquated version of the American dream.

This would track if wealth were being spread and jobs actually were better paying. Just saying things doesn't make them so. Are we really going to pretend a worker has the buying power they did 50-60 years ago. please. Back then a single earner could support a family, retire at 60, afford a house and 1-2 cars, vacations, plenty of food and clothing. Today it takes two earners often working 2+ jobs to have less of all the things but sure your story sounds good.

[obiwan1129]

Companies that I worked for have been acquired twice by PE firms. I can assure you for the rank and file it is no picnic. Usually the PE firm will try to plus up the companies offerings. Someone here already pointed out how they branched out to cards recently. The deal was likely in discussion for a long time and that was a strategic part of it.

Most PE firms try to get in and out within say 5 years. Watch the executives, they start leaving that tells you all you need to know. If increasing the offerings doesn't work out, they will do the Gordon Gecko thing and try to sell off the pieces.

It's a good deal for the owners and probably some of the executive leadership there but I figure given all the uncertainty with new overlords coming in, how they manage, etc we'll be seeing a lot of folks heading out. It's the nature of the beast.

[birdman42]

Originally Posted by mechanicalman

The premise of your argument is pretty flawed. This is a private equity investment, meaning they will likely hire more people (creating more good jobs in your words) and invest in more and better services to fuel growth. If some entrepreneurs get wealthy in that process, why begrudge them? I think the idea of running a business until you retire or pass it along to (odds are, dysfunctional heirs) is a pretty antiquated version of the American dream.

I hope you're speaking from personal experience and not just parroting the "job creators" trope. That's certainly not the way it worked for me or my wife. She worked for a long-established public company (a household name) that got taken private in the mid-80s. Five years later it was gone after it had been stripped of all its assets. Fortunately the govt (big, bad govt, right?) stepped in and wouldn't let them strip out the pension funds. We were out in Indiana recently and the entire site is razed.

I worked for a private company that was thriving with a thousand employees. The owner was aging and decided to sell to a private equity firm. First the different divisions were carved out. Then, in what was left of my division, the layoffs began. After three years there were only half as many employees as before. The founder made out well and the equity firm is raking in bucks, but the employees and ex-employees not so much.

And now a card, just to keep this on topic.


Bill

[One 'ol Cat]

Perhaps you are right. But the company I work for was acquired by Blackstone. They demanded their cut off the top. It bled us dry, forcing us to borrow money for operations. Eventually they sold us off to our main creditor, who just flipped us to our main competitor to recoup their loan. Look, I am a capitalist, but, they squeezed out a proud and reputable company.

[sportscardpete]

There are two types of PEs - 1) trim costs out of a bloated company or 2) use it’s network and capital to help a current company grow faster than it would on its own. Excited to see what Blackstone will do with the latter

[Johnny630]

To me all these PE Firms and Investment Groups buying up companies related to Sports Cards Shows me they think there is money and further growth.
Graded Cards is Not a Hobby to these Guys, that's BS, I don't care if they have a few PSA 10 Vintage Cards Hanging on their wall, it's an Business and Business is Business the Bottom Line is Profits. I'm just hanging on not buying anything waiting for them to over inflate the market again, it's only a matter of time until we have another January-March 2021 insane auction result sales numbers on slabbed cards.

[Frankish]

Originally Posted by Johnny630

To me all these PE Firms and Investment Groups buying up companies related to Sports Cards Shows me they think there is money and further growth.
Graded Cards is Not a Hobby to these Guys, that's BS, I don't care if they have a few PSA 10 Vintage Cards Hanging on their wall, it's an Business and Business is Business the Bottom Line is Profits. I'm just hanging on not buying anything waiting for them to over inflate the market again, it's only a matter of time until we have another January-March 2021 insane auction result sales numbers on slabbed cards.

Yes, I found the transaction curious. It seems that at least some sharp financial minds believe the growing collectibles market will persevere post-pandemic. I don't know how much of CCG's business is sports cards vs comics, etc., but I see too many possible disruptors to the card market (the one area of CCG's business I'm familiar with) to place a big bet in the area. Guess that's why I'm not in PE....