ENVE Composites Acquired by PV3 Investments

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I had forgotten that Amer sports had purchased ENVE. It sounds encouraging that the new owner is a cycling enthusiast

It seems like PV3 investments is the guy’s family investment firm. So, in the best case, this winds up like Moots did except the acquirer is not looking to step in as CEO.

In the worst case, the new guy gets delusions of grandeur and attempts to buy up more brands to cross sell and bundle them with NFTs.

There’s absolutely no indication that this is going to happen right now, I’m just a bit scarred from previous experience. When you raise capital by equity, you have to trust the people you sell to. They might be OK, but problems might surface later. And you have to trust the people that the original investors sell their stakes to, and you don’t necessarily have control over who they sell to.

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I’ve got a gift certificate for Enve…i feel like I better hurry up and use it.

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I wouldn’t worry about that. Amer has been trying to get rid of their cycling profile for a very long time and ENVE was the last big one remaining. This was a great time to buy considering the general valuation of cycling brands in the US lately.

I live close to the ENVE HQ and know many people involved in the operations and the PV3 investments purchase. If anything, there’s a better chance of the longevity of using your gift certificate now than there was when Amer owned them

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I hope it’s a good thing.

Unfortunately, it’s usually a bad thing.

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It is undoubtedly a good thing that ENVE is splitting off from Amer, but PE investments in the bike biz are often bad things.

The fact that Hancock is a cycling enthusiast could portend good things, but I’m wary at this point.

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I’m hoping for the best but my gut reaction was oh no, look what PE did to Wahoo. To be fair that was PE + market forces that affected a lot of the industry, but the PE aspect only made things worse.

Hope it’s for the best. I’m a big fan of Enve and have been using their products for a few years now. Hope they can continue to put out great products out!

There’s some potential confusion here. What’s commonly known as a “private equity” firm is a company that gets money from other individuals (private) to invest in companies (equity) for a short while (5-7 years is typical), then get out. Those firms have a well-deserved bad reputation for short-term thinking, opportunistic bets, and a transactional mindset that often ruins companies.

HOWEVER, “private equity” on its own (which I’ll call “private capital” to differentiate the two) means only a capital investment by a private person or group, as in NOT the publicly-traded securities markets. Private capital, most especially as deployed by families, is the most patient and usually the most well-advised, careful investment capital available anywhere. You’re far more likely to see short-term thinking from the stock markets (quarterly EPS targets, anyone?) than you are from a family office or family investment.

I cannot tell from what we know here whether PV3 is a PE firm. But from the Cycling News reference of it as a “family holding company”, it does not sound so. I’d suggest holding off on the doom and gloom for now. Let’s wait and see.

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Agreed. I can’t share too much as to not dox myself nor my relationship to anyone involved but PV3 investments is definitely not a PE firm. It literally is a “family owned” investment company.
Look at Mark Hancock, he is the cofounder of the company PACS which went public on the stock exchange earlier this month and they did not give up much equity. He doesn’t need private equity with that kind of money, and is just using PV3 as a vehicle for investment purchases compared to buying solo. Considering the timeliness of this, there’s a good chance this purchase now was tax burden related from going public rather than bike-industry related (though of course that had play). That’s beside the point though.

He is from a city less than 20 minutes away from ENVE HQ. Everyone he knows rides ENVE because it’s local and he rubs shoulders with the employees who have been there since the “Edge Composites“ days.
ENVE company is failing and super cheap because Amer wants to get out of it → buy discounted boutique brand he’s passionate about as a cyclist and business owner to grow over time with patience, and keep it local to Utah

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That sounds like most of my client families. :100:

If so, he/they will be looking after ENVE and nurturing it to grow for decades to come, and they’ll have the patience to do the right thing for the company, not just whatever is most profitable at the moment. Godspeed.

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ENVE is in dire need of a shot in the arm, so I am hopeful on this one.

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Based on recent sales activity, it would seem that ENVE is in a similar position to many other suppliers…declining demand coupled with high inventory levels. (This is pure speculation on my part, but it seems to line up).

Again, it is a good thing they got spun off from Amer, and things sound positive re: the new ownership, but we will have to wait and see how things play out.

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The speculation lines up. The retail industry, as a whole, is troubled by very high inventory levels.

When it comes the cycling industry, there’s obviously a lot of inventory being dumped into sales channels at reduced prices. The short-term issues the industry is running into now are margin hits, inventory of aged products getting in the way of launching new products, and not having the power to borrow capital at low interest rates - a common mechanism historically used to get through the cyclical nature of industry (no pun intended).

The long-term trouble is cycling companies over saturating the market now with product, disrupting their future ability to launch new products. Interesting times. But, from an investor standpoint, they may be purchasing these companies at low values.

I’m not certain that is correct…perhaps in some COVID-related categories, but even that is clearing up. For example, thermometers are finally getting through the glut of product that came crashing into the shores in 2022.

However, the issue at play for a lot of categories, and is certainly true for cycling-related stuff, is that you are dealing with durables and not consumables. Long product life, combined with drawing in more consumers during COVID, means declining sales right now. And as you note, blowing out the current inventory only impacts the launch of future products.

For our primary category (consumer medical diagnostics), we pulled MANY future consumers into the category during COVID and it is being reflected in POS now. Sales are down 20-30% at retail. “Luckily”, it is a needs-driven purchase and people get diagnosed with health issues daily, so there is always new demand…it is just isn’t as robust right now.

Their pricing has always seemed absurd. $2800 for a set of wheels that dont test all that well. And with the Chinese players now doing composite spokes, Enve is far behind. I dont understand what their competitive advantage is anymore. House brand wheels are great quality and there is tons of innovation coming from overseas. They are in a tough spot and Im not convinced that its because of Covid.
Doing frames is great but Trek and Specialized have choked your distribution. The first thing I would do is hire a great head of product and innovate.

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I agree but I also thought releasing a 5k+ frameset that looks like everything else was also a bad idea. I’ve only ever seen one in the wild and I’m around a bunch of wealthy cyclists.

:slight_smile:

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I agree that their stuff is near boutique. There is so much competition for the “mass” market and only so much in the high end. Total conjecture would be that ENVE has the capability and expertise to take on specialized composite manufacture domestically such as aerospace which will allow them to continue to be in the cycling space.

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everything looks like everything these days, but I think the problem is brand recognition and prestige. People are fine buying S-works SL8 for 5k5 with just the seatpost but think Enve that also includes your choice of seatpost, stem, bars is outrageous. Don’t get me wrong, I’d never pay full price, they are easily found at discount but there is clearly a bad taste from part of the consumer market against Enve. I think the problem might be their boutique prices while trying to grow as a wide market brand while like you and others said offering not much in terms of innovation, their wheels went from being super harsh to heavy, their mountain wheels are heavier than zipp, rovals. But reserve wheels are also on the heavier side and I see a lot of them out there, but of course when you take into account Santa Cruz that helps a lot.

Like others have mentioned before if their framesets would cost ~1K less I think they would sell a lot more and get good market penetration, since they definitely don’t have the prestige of an Sworks / Roval at least not here in the US

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