In advance let’s just get something straight. I started to write this post because of a recent transaction between a reputable small workshop and a huge investor… but.. It doesn’t reflect my opinion about that business (as I don’t know any detail it really can’t), it is only about this phenomenon. And this is only my opinion about THE phenomenon.
So, what s it about? Usually there is a small workshop, a family owned company, with a good reputation and brand name, luxury, not needed to mention: very high priced products. The investor usually buy a share of this business, or maybe just the right using the name. What could be wrong with it?
Luxury lost its luster – this is not a question, this is a fact. I mean luxury, which is manufactured in far east factories in millions. Those products – even they try to make us believe the opposite – are not handmade, though the quality can be still very high, but the ads are just lying. So, the next step to maintain the high end image – buy really high end brands. These brands – thanks to the small scale production and the very high price, were only available to a small, exclusive circle, but like these products usually – very well promoted and demanded by a wide range of customers. This acquisitions has a good effect to this segment – more people can buy the products, probably at a more friendly price range.
The owner of the small brand receive a bunch of money, the customer can get their long wanted product a bit cheaper, so what is wrong? win-win, right? It sounds good, and it really has a good effect – depends on the details – but let’s just talk about the down side of this business!
1. Craft. If the small workshop can’t maintain the production at the same professional level, that is a huge loss for the craft. I am not saying, that this is necessarily happens, but don’t forget – investors do it for money, and definitely not for helping those tiny little workshops. Income, nothing else. As a craftsman you don’t need to be a dedicated missioner – at the end of the day, you are looking for money to feed your family, right? So, what is wrong to get a bunch of money for something, what you already created? I think only one thing – it represents your future. You wouldn’t cut down a fruit tree in the middle of the winter just to heat up the house, right? (and trust me – even if you don’t cut this “tree” – you not gonna enjoy the fruits anymore. There is no such a thing as “free dinner”).
2. Heritage. Do you really think, that a family business with a long history, will be kept the same way by a huge a corporate? Bunch of policies, board of directors, marketing campaigns, strategies, administration – where the heritage will be placed? I guess somewhere behind shiny panes.
3. Luxury. Well, here is my opinion – you don’t need to believe me – real luxury is not made in factories. Real luxury is not made under investor names. Real luxury is created in a small workshop, by a highly skilled craftsmen. You don’t need “investor” for this. I hope. If you starve – then you do. (In this case don’t expect too much money from them)
4. Pressure. Pressure in decisions, pressure to make more money, pressure to act to satisfy shareholders. Pressure, pressure, pressure.
5. Flexibility. As a craftsman – 100% owner of a brand – I can decide to stop a design after 4-5 years, just because I don’t like it anymore. I can introduce a very work intensive antique technique, because that makes my product better. Not efficient – better. I can do it as a small, independent master. I am not sure, if I would own only a part of the business.
I heard plenty opinion about this phenomenon, since I started to write this post. Pro and con. It is not a question, that this kind of businesses bring a bunch of benefits as well, starting with the money, but… that money is for the future. It covers risks, but still. If – as an owner – you don’t evaluate your brand more that the price – it is a smart choice to sell, if yes – well… obviously not.
It is hard to decide what one should think. I just know what I shall say, if I would get this kind of offer (not if I am even close to get one):