Musical Instrument Retailer

Company Overview

Musical Instrument Retailer - An internet retailer and cataloger of musical instruments with $130 million in revenue.  The Company sells band, orchestral and rock ‘n roll “combo” instruments and pioneered the use of catalogs to sell musical instruments and today, its master catalog is considered the definitive product reference guide in the industry.

Engagement Overview
•   Despite a leading industry position as a musical instrument retailer, and an outstanding reputation for product line breadth and customer service, the Company began experiencing financial difficulties much of which stemmed from litigation with minority shareholders.

•    Additionally, the Company faced increased industry competition coupled with issues arising from the consolidation of multiple warehouses into a new distribution center and a software conversion.  Continuing losses and the minority shareholder litigation eventually led to a bankruptcy filing.

•   The Company was well served by Fort Dearborn Advisors (“FDA”) in this transaction.  In a short period of time, we contacted over 100 industry and financial buyers leading to multiple visits and offers from which to choose. 

•   When the approved “stalking horse” terminated its bid, FDA quickly negotiated a deal with the industry’s largest participant, who had expressed strong interest but was initially outbid earlier in the sales process. 
Results
•   Our sale process resulted in a transaction that closed within 120 days of our retention at an attractive valuation despite the need to consummate a deal with a second buyer.

•   We achieved this valuation and quick closing despite continuing losses throughout the sales process and softness in the industry.  

•  FDA represented the Company prior to its bankruptcy filing in a financial consulting role, negotiating with the Company’s lender for adequate time and DIP financing while simultaneously working on preparing for bankruptcy and generating a viable “stalking horse” bidder.