Mergers and Acquisitions...and More

by George Petersen
in Editor's Note
George Petersen
George Petersen

Over the past few months, the production industry has been awash in rumors about some big changes afoot among several large players in the biz, who may soon be combining their operations. Unfortunately, we can’t report on these rumors until they are factually confirmed. But if you turn to these hallowed pages in the months (or weeks) to come, we’ll keep you informed just as soon as we can break the news.

›› Growth through Acquisition

One common trend in pro production (and virtually all business) is that growth drives the industry. Organic growth—where a company grows from within — is most common, but can be slow and is based on internal resources, such as staff and current inventory. This sometimes can be boosted by capital expenditures — i.e., investments in gear that will attract additional business, such as line arrays, digital consoles or whatever happens to be tweaking the collective ear(s) or the industry this week.

A major source of funding/expansion can also come from a business merger, which can arise from an actual combination of the assets of both companies, or possibly an alliance of separate assets. The latter may in fact be a less-constraining deal, where two soundcos work together to share resources —perhaps combining their subwoofer arrays to cover a large festival. But far more interesting is the legal/financial aspects of an actual merger/acquisition.

›› Recent Mergers

If you can stretch the definition of the word, “recent,” to apply to something that happened 17 years ago, one of the biggest deals in our industry in recent years was the Showco/Clair Bros. (now Clair Global) linkup in 2000. Here were two leading touring companies sharing high-end proprietary technologies and a dominance on the top-end artist roster — a winning combo in anyone’s book.

On the manufacturing side, however, the big kahuna in pro audio mergers in our industry goes back even further, stemming from Altec Lansing, which was arguably the most influential audio technology acquisition in the past century.

The “Lansing” name comes from James B. Lansing, who founded Lansing Manufacturing in March 1927 to build radio speakers. (Lansing, who was self-taught in electronics, was actually born as James Martini, and adopted the Lansing name shortly before his company was formed.)

The timing, in 1927, was right. The roaring ‘20’s were well underway, and just a few months after Lansing launched his firm, Al Jolson’s popular “talking movie,” The Jazz Singer, came out, marking the beginning of the end of the silent film era.

Suddenly there was a big demand for sound systems, and Lansing was ready to get his piece of the pie. Lansing later worked with other leaders, such as MGM Sound, developing the Academy Award-winning Shearer Horn, which would later be recognized as the one of the first large-format, Hi-Fi sound systems for large audience reproduction. Its “W” bass box design remained a sound reinforcement mainstay for some 50 years.

Although Lansing is now lauded for his inventive engineering talents, he wasn’t the world’s greatest businessman. A partner, Ken Decker, was skilled at that end of the business, but was killed in a plane crash in 1939. Within two years, Lansing Manufacturing was in dire financial straits, and in 1941, the company merged with Altec Service Corporation. The new company was named Altec Lansing.

As part of the merger agreement, Lansing signed a five-year contract to serve as the company’s vice president of engineering. The move seemed to suit him — instead of worrying about business issues, he was free to focus on engineering projects, including 1944’s 604 15-inch coaxial, and the groundwork for the A-7 Voice of the Theatre — an industry standard for more than half a century.

Even so, Lansing appears to have yearned to run his own business rather than be employed by others. In 1946, as soon as his five-year contract was up, he left to form a company called Lansing Sound Inc. Altec Lansing thought the name was too similar to their own, however, so the name became James B. Lansing, Inc., later shortened to JBL.

›› Mergers and You

So if you own a mid-sized sound company, could this be the year that you will be involved in a megabuck acquisition, and your initials will be stamped on audio gear sold around the world? Um…maybe not. However, this is not to say that no matter what size, you could not apply any cooperative ventures, alliances to your situation and bump up your clout in your region.

Consider giving it a shot — it just might be worth it.