Last week’s announcement that Focusrite had acquired loudspeaker manufacturer Martin Audio sent shockwaves through the pro audio market. Today (December 23), Focusrite CEO Tim Carroll and Martin Audio managing director Dom Harter have spoken exclusively to PSNEurope about what the deal means for both parties and why there may well be more acquisitions in the pipeline.
As one of the world’s leading manufacturers of music creation tools and studio-based products, few could have foreseen Focusrite’s expansion into the live and integrated systems market. Yet a breakdown of the financials (Martin Audio’s unaudited turnover was £24.4 million (up 12 per cent year-on-year), with an EBITDA of £3.4 million (up 31 per cent year-on-year for 2019) suggests that the £39.2 million Focusrite paid could prove to be an incredibly shrewd piece of business, given the company’s significant growth and expansion into new territories over the past 18 months.
The deal, which comes hot on the heels of Focusrite’s acquisition of headphone and monitoring company ADAM Audio, also suggests that more buyouts could be in the offing.
PSNEurope spoke exclusively to Carroll and Harter to find out precisely what inspired the acquisition and what the future holds for the two High Wycombe-based brands…
How did this acquisition come about?
TC: We have been proactively looking for companies to expand our business. Brands that are strategically aligned and that fit culturally. Martin Audio may not be one that people see as an obvious candidate, simply because it isn’t within our core Market. However, internally we did see benefits to expanding into other verticals in the audio market; live and installed sound is an area where Rednet has had some healthy adoption and a steady growing market with plenty of opportunity. There was also a legacy of a relationship there with [Focusrite founder and chairman) Phil Dudderidge and some of the other staff and the timing was right because Martin Audio were at a point where they were looking for their next step.
As a management team they’d decided that they ultimately wanted to be part of a group that was in the industry, with a family of related products and people that shared similar passions. So, when they came to us and said there was an opportunity, we took a good look at the business, met with the leadership team and it felt like a great match worthy of deeper investigation.
DH: Both companies have been talking for a number of months now. Focusrite were looking for successful companies which would help the group expand into different vertical markets, and were also a cultural fit.
The Martin Audio team were looking for a long-term stable home for the brand. Tim Carroll and Phil Dudderidge understand the market and are passionate about audio and music creation. With Focusrite we have industry experts 250 metres from our front door who believe in the brand, the product and our vision – I couldn’t be happier.
How will Martin Audio fit into the business? How will the day to day business be affected by the acquisition?
TC: Firstly, we want them to continue the fantastic journey they’ve been on. Martin Audio has done well under the new leadership. We don’t want to do anything that would distract from that. So the strategy here is to let them continue to do what they do well; to help them where we can and in time start looking together at where there are synergies and opportunities. In time, there’s obviously a lot of things that we’ll want to delve into in terms of logistics; areas where we can use our scale to maybe leverage different assets and resources more effectively, but we’re in no hurry.
DH: We don’t intend to make serious structural changes to the business. Our future plans remain the same and I know that Focusrite plc are invested in them. It is this investment that will help us to provide the best solutions to our clients. Therefore in turn, help us run the best pro speaker system company on the planet.
What makes Focusrite the right fit for Martin Audio?
DH: The team has a focused passion for our industry which is shared at Martin Audio. Both companies have a successful track record in providing customers with the right tools for the job, whilst investing significant amounts of money into R&D. This is in line with our on-going plans. More products, more training and the continued expansion of the Martin Audio family.
As Focusrite is largely a studio-focused brand, how does this fit with Martin Audio’s live portfolio?
DH: Of course products like RedNet regularly overlap with Martin Audio in the live space, so it is not quite that exclusive. However in reality part of the reason this works so well is precisely because we broadly don’t operate in the same verticals. We offer Focusrite immediate access to a large market we are rapidly growing in every day. They offer Martin Audio a long term home with some fantastic sister products and brands underpinned by some serious R&D.
I know the teams at all the group companies have impressive plans for their brands and that of course remains the core focus while we focus on our main core markets – installations and live sound.
Martin Audio has now had a number of years of continued consecutive growth, and within Focusrite plc we now have the backing and deep industry expertise to ensure we are the market leader in our sector.
Can we expect more Acquisitions in the new year?
TC: We have a very active pipeline of other opportunities that we’re looking at. I would venture to say that we’re certainly not done with acquisitions. There’s nothing I would call pending at the moment, but we certainly have a number of targets that we’re looking at that we think could be viable candidates. We have set the bar high in terms of criteria for consideration: Well run, strong brand awareness, culturally aligned and a strong portfolio that complements our existing solutions. We have been very fortunate to find two strong businesses in ADAM Audio and Martin Audio that meet that criteria; and we know there are others out there as well.
An extended version of this interview will be available in the February 2020 edition of PSNEurope (out January 29)