Reef nutrition

BRS To merge with Neptune

A System Technician to help up the quality standards
An Electrical Engineer, showing more technical horsepower is needed for product development.
A customer facing person showing more need for customer interaction and growth

I see all good things here. More capital in a company often means more R&D, which leads to better products faster if run correctly.
 
I am enjoying this thread about business, M&As, and impacts (+/-) to customers and the hobby. It got me thinking of instances where bigger is definitely not better. Amazon, for example. Sure -- we can have most any and everything delivered to our front door in a day but at the demise of Main St small-businesses, to name just one casualty.

And the thread has me appreciating small independent businesses while we still have them! Especially this one, not unlike our highly specialized reef hobby stores (and suppliers):


Monterey Market is in Berkeley. "Eat At Bill's" explains, among other great topics, just how important small specialty retail was to the Bay Area food movement of the 1970s. If it were to be acquired by W.F. it's gone forever.

Enjoy it while it's hot!, I say.
 
Squist said:
I am enjoying this thread about business, M&As, and impacts (+/-) to customers and the hobby. It got me thinking of instances where bigger is definitely not better. Amazon, for example. Sure -- we can have most any and everything delivered to our front door in a day but at the demise of Main St small-businesses, to name just one casualty.

And the thread has me appreciating small independent businesses while we still have them! Especially this one, not unlike our highly specialized reef hobby stores (and suppliers):


Monterey Market is in Berkeley. "Eat At Bill's" explains, among other great topics, just how important small specialty retail was to the Bay Area food movement of the 1970s. If it were to be acquired by W.F. it's gone forever.

Enjoy it while it's hot!, I say.
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My kid is friends with Bill's grand daughter. The family still owns the business.
 
Wlachnit said:
I'll chime in here..There is no requirement that a partnership needs to be 50:50. Partnerships are entirely driven by the capital structure of the enterprise, which then drives corporate governance. So, as an example, Ryan may have 20% ownership in the new BRS structure. Yes, he may still be outvoted on things, but only at the Board level, not day to day operations. But, it is still a partnership...and yes, he could be outvoted and get fired if he doesn't do his job.

Consolidation in any industry is part of a free enterprise system. And, an industry such as this one is highly fragmented, highly inefficient, and most small enterprises are poorly capitalized. While Private Equity has a had a bad reputation in the past, this was in part because they used leverage. That is much less the case today given the crazy amount of capital available both in the private and public markets. (Although, have no idea how Bertram is structured). Importantly, Private Equity injects capital into the industry and can provide much needed capital which is required to, amongst other things, develop new products (in a technology innovation industry like ours). Yes, competition is good, but if the industry is highly fragmented and poorly capitalized, then product innovation will be slow or non-existent. Or worse yet, enterprises stagnate or go under because working capital requirements increase as businesses grow. A lot of people have misconceptions that as businesses grow and become profitable, their capital requirements go down. But, it's actually the opposite. The bigger you get, the more capital (cash) you need on the balance sheet. Anyway, I'll stop there...overall, I have absolutely no concern with these acquisitions. And, as Vincent already stated, we should see new prodiucts come more quickly from Neptune.
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I think these are all great points.

I have a background in dealing with PE and couldn’t have worded it better myself (edit: didn’t intend for that to sound like I was assuming you didn’t have a background in PE). They have built a nice economic mote for sure. I am watching closely to see what comes of this.

Edit: Just to add, I am very curious to see what they have planned for their exit strategy. I think it’s safe to assume we won’t be seeing BRS IPO in a few years (not to make it sound like that’s the only exit strategy that exists).
 
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phatduckk said:
+1 - I was just think about the same thing.
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Their website clearly states they have a preference for control as well as focusing on technology enablement. Neither bad or good, just their approach.

I can’t find to much in the way of fund performance and metrics, but they post a lot of the current companies and exited companies on their website. When I get more time that might be a great way to see how they do business historically.

Off the cuff, looks like they stick with investments for about 6-9 years which is pretty average In my experience.
 
Blaise006 said:
I think these are all great points.

I have a background in dealing with PE and couldn’t have worded it better myself (edit: didn’t intend for that to sound like I was assuming you didn’t have a background in PE). They have built a nice economic mote for sure. I am watching closely to see what comes of this.

Edit: Just to add, I am very curious to see what they have planned for their exit strategy. I think it’s safe to assume we won’t be seeing BRS IPO in a few years (not to make it sound like that’s the only exit strategy that exists).
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I was just going to add that few venture cap funds slash angels are actually in it for long term and will essentially flip it to next group slash public investment. I’m hopefully they last two years but don’t expect it.
 
I am not really surprised to see consolidation.
As these devices get fancier, the research and development, and the web/software maintenance, goes up.
With the low volumes, it is simply not sustainable.

I am surprised to see a consolidation between a vendor and a retailer though. That can be risky.
All the other vendors supplying BRS are likely very nervous at this point.
Some might certainly start pulling back from that store, and expanding presence on amazon/others.
Same with other vendors that sell Neptune products.

Interesting question on exit strategy.
IPO would be great for the employees, who presumably (hopefully) have sizable options. But difficult to see it being large enough.
An exit strategy is not mandatory. As a part of an umbrella corporation, your cost center profit simply adds to overall bottom line.
 
rygh said:
I am not really surprised to see consolidation.
As these devices get fancier, the research and development, and the web/software maintenance, goes up.
With the low volumes, it is simply not sustainable.

I am surprised to see a consolidation between a vendor and a retailer though. That can be risky.
All the other vendors supplying BRS are likely very nervous at this point.
Some might certainly start pulling back from that store, and expanding presence on amazon/others.
Same with other vendors that sell Neptune products.

Interesting question on exit strategy.
IPO would be great for the employees, who presumably (hopefully) have sizable options. But difficult to see it being large enough.
An exit strategy is not mandatory. As a part of an umbrella corporation, your cost center profit simply adds to overall bottom line.
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Possible we are not talking about exactly the same thing. Apologies if I misinterpreted.

I would be very surprised is Bertram doesn’t have an idea of various exit strategies it will employ for BRS, if this part of a closed end investment portfolio. It need to be sold as the fund comes to maturity and investors gains are recognized.

A fund manager would not enter this position if they did not project out exit strategy, MOIC, and the various other metrics used as evaluation tools.
 
rygh said:
I am not really surprised to see consolidation.
As these devices get fancier, the research and development, and the web/software maintenance, goes up.
With the low volumes, it is simply not sustainable.

I am surprised to see a consolidation between a vendor and a retailer though. That can be risky.
All the other vendors supplying BRS are likely very nervous at this point.
Some might certainly start pulling back from that store, and expanding presence on amazon/others.
Same with other vendors that sell Neptune products.

Interesting question on exit strategy.
IPO would be great for the employees, who presumably (hopefully) have sizable options. But difficult to see it being large enough.
An exit strategy is not mandatory. As a part of an umbrella corporation, your cost center profit simply adds to overall bottom line.
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For me, I hope this means some of our less than stellar LFS will step up their game. I use both when I need something quicker than what my local guys can get. For me, it all comes down to will this be a good thing for hobbyists and their fish? I am interested to see whether they will limit availability of Neptune products, becoming the sole outlet.. that would suck. Like most, will wait and see how it goes and then make a decision.
 
Blaise006 said:
Possible we are not talking about exactly the same thing. Apologies if I misinterpreted.

I would be very surprised is Bertram doesn’t have an idea of various exit strategies it will employ for BRS, if this part of a closed end investment portfolio. It need to be sold as the fund comes to maturity and investors gains are recognized.

A fund manager would not enter this position if they did not project out exit strategy, MOIC, and the various other metrics used as evaluation tools.
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Talking about differently things, yes.
I was talking more about the company having an exit strategy, not the investors.

Corporate exit strategy is really 3 things : Remain private, IPO, or sell the company.

A fund manager definitely needs an exit strategy.
But that ads another option, which is re-captilalization.

My guess for a lot of these funds like Bertram:
They pump money and business experience in, turning a small company into a market leader.
That greatly increases the valuation of the stock, even if it is not public yet.
Plus the market share and volume it makes the stock less volatile and more widely know, so a perception of lower risk.
Once you do that, you can recapitalize with debt/bonds, or sell equity to other investors that handle more risk-averse investments, or other options.
A real IPO is great of course, but it takes so long.
 
rygh said:
Talking about differently things, yes.
I was talking more about the company having an exit strategy, not the investors.

Corporate exit strategy is really 3 things : Remain private, IPO, or sell the company.

A fund manager definitely needs an exit strategy.
But that ads another option, which is re-captilalization.

My guess for a lot of these funds like Bertram:
They pump money and business experience in, turning a small company into a market leader.
That greatly increases the valuation of the stock, even if it is not public yet.
Plus the market share and volume it makes the stock less volatile and more widely know, so a perception of lower risk.
Once you do that, you can recapitalize with debt/bonds, or sell equity to other investors that handle more risk-averse investments, or other options.
A real IPO is great of course, but it takes so long.
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Yea, I was strictly speaking from the investment side. Bertram will likely explore a recapitizaltion while it’s invested to obtain the best weighted average cost of capital possible.

I don’t think we will see BRS IPO personally, but Bertram has many other exit strategies available to them.

I also would think the owners will likely stay involved after Bertram’s exit, regardless how they sell it so hopefully we don’t see any major exit plans on the corporate side. That would be a net-negative indicator for me.
 
I wonder if BRS will truly merge the two companies.
For a distant view, it does appear that each company has particular strengths and weaknesses, so it might go fairly well.
Not a ton of overlap.
But mergers are such a pain.
 
BRS is just one of the purchased companies. Bertram Capital is the one buying everything. I don’t know why people say/imply BRS is driving this.

Bertram is local, in Foster City I think. It would be great if they would let the reefkeeping community know directly how they see the future of our hobby shaping up.
 
I enjoyed watching them answer questions about BRS + Neptune on their YouTube channel.

Will be interesting to see what they do with EcoTech. There was also rumors Bertram was in talks to acquire Innovative Marine but it fell off.

 
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