When Black Diamond Equipment (Nasdaq: BDE) went public in May 2010, it was no secret that it planned to grow through acquisitions. And last week, with industrywide fanfare including from Poc’s U.S. president, it announced plans to buy Poc for $43.5 million.
Skiing Business caught up with Peter Metcalf, Black Diamond Equipment Inc’s co-founder, president and chief executive officer, to see what the acquisition means for both companies.
You guys bought Poc. Why didn’t the little fish buy the big fish (asking with a chuckle)?
It’s funny you say that. I read a comment on a blog post that alluded to that same thing. Some people think Poc is the bigger company, which just goes to show how much of a following the brand has. They have a technology and brand coolness footprint that’s exponentially larger than their economic footprint, and that’s the kind of company you want to get behind.
But we’ve gotten universal high-fives and accolades from both investors and my peers in the industry, and that confirms to me that we made the right move acquiring a rapidly growing brand.
So what’s in store for the brand moving forward? What will the product focus be? Ski? Bike? Perhaps climbing now?
There are so many synergies between Poc and the Black Diamond family. Poc gets our backend infrastructure, but the brand will maintain its autonomy. They have a strong identity and the management team has a clear vision of where it fits into the market and how to grow it, so they’ll continue to run that ship.
Black Diamond was founded to create a difference among climbers, mountaineers and off-piste skiers. The driver has been that we want to make people safer, more comfortable and allow them to perform at a higher level of performance without more training. Poc echoes that with its body armor, bike and snow helmets, goggles, gloves, sunglasses and more.
We want Poc to expand that offering in areas that make sense: namely all styles of biking, skiing and snowboarding. That could mean multifunctional equipment like packs and technical clothing that are designed for those sports.
Does that mean we’ll see ski packs with integrated back protection and things of that sort?
I’ll leave it to the imagination as to what that exactly means. We’re still going through the R&D process and much of it is still on the drawing board. Poc will be a $100 million (or more) brand though.
What are some of those financial metrics that are being set for the brand?
Poc grew by 35 percent in the last year despite one of the worst ski seasons in history. Our belief is that just by doing what Poc is doing now, combined with the strength of the Black Diamond backend, we can keep that growth going.
Part of this deal included incentives-including stock options-for the management team if certain goals are met. One of those is that Poc grows 30 percent per year for the next six years, and the Poc team supports that.
Are you worried about putting too much emphasis on money and not enough on product?
I don’t think it’ll damage the product. When you look at the numbers in just Europe and North America, the bike and snow helmet industry combined with the gloves, eyewear and body armor markets are big. There’s room for a cool edgy player to take market share and grow to be a $100 million brand. I don’t think you can get to that mark if you diminish the product.
Do you think the acquisition will help BD in Europe? How and why?
I think it will in many ways. Poc has a strong and rapidly growing presence in both Europe and North America, and I think we’ll be able to leverage that. Poc’s relationships in the alpine market will help us start conversations and open doors for the other brands under the Black Diamond Equipment Inc. umbrella (Black Diamond and Gregory).
Some retailers that carry Poc may not know or trust the Black Diamond or Gregory line, so this will help us in that area.
Does that mean you’ll be able to throw your weight around more?
We will never throw our weight around. Just because a retailer may carry one brand and not another, doesn’t mean they’ll be forced to take all or nothing. I think you win shelf space through thoughtful decisions, great marketing, innovative product and growing a business from the ground up. We’ll just use our brands to introduce the rest of our brands to retailers and other partners.
We hope to send a very clear message to the trade that if you like the way BD has grown the brands in a premium way, then you should have no issues with Poc because it’ll be nurtured and grown in the same way. Everyone in the trade should know that if they carry one brand and like how it operates, then they should consider the others too-and that goes for any other brand we acquire down the road.
What other types of companies are you looking at?
We’re always looking at a handful of companies. One thing we learned with Poc is that it takes time to build a relationship. It’s kind of like dating because you get to know each other, and it’s sometimes hard to tell when the relationship will go to the next level. So if you want to grow through acquisition, which we do, then we need to constantly be having conversations with management teams at other companies.
We want to be, as a portfolio, considered as a leading portfolio corporation with the best, coolest, most passionate brands in the human-powered space. We don’t want brands that overlap with what we’re doing though. We want brands in a space that we’re not in already and would be complimentary. Or we want to do smaller acquisitions that we could tuck into our existing brands such as Gregory or Poc. But we definitely want to stay in the markets we’re in now: cycling, alpine skiing and climbing.
So what’s the plan for Poc and its employees?
The Swedish parent company is fundamentally driving the brand, so you won’t see many changes there. There may be some changes with distribution over there, but otherwise not much will change-even with sales and marketing.
In North America, Jarka’s team may change a bit. We’ll likely consolidate some of the backend infrastructure like finance. But because we’re adding a brand and growing, we’ll certainly offer positions to as many Poc employees as we can.
Will you guys operate Poc out of the BD office in Utah?
Poc is a global company with a Swedish heritage, and it’ll stay that way for the most part. Jarka will still lead the brand here in North America, but we will look at distribution, finance, customer service, and things like that. Those will likely be combined with what we’re doing here in Utah. Marketing and branding, though, won’t change in North America because they’re doing it right.
We’ll start working on that starting in late summer and fall, and start executing as early as January. But because we’re a public company, we’ll have to transfer over the finance part of the business to comply with SEC requirements. Hopefully that’ll be pretty smooth though since we have a playbook from when Gregory was acquired.
Did things go smoother with Poc than with Gregory?
Actually, not really. Gregory was part of the conception of going public, so it all came together at once. This acquisition wasn’t as big, but surprisingly it was more complex. There were different subsidiaries and a diverse board of directors that had different interests that made negotiations more complex.
But bringing over the backend infrastructure should be easier because of our experience with Gregory.