What To Watch For In 2017

By Russ Thurman

The building of brands through acquisitions is not new to the outdoor market. However, there has been a notable increase of acquisitions in the firearms industry.

A search of Shooting Industry’s Digital Versions (www.shootingindustry/digital-version) reveals dozens of acquisitions in recent years. Many of them involve smaller companies, which deserve watching because they often grow into large businesses. Most notable, however, are acquisitions by larger companies.

Vista Outdoor made such acquisitions a major part of its strategic plan when the company spun-off from ATK in early 2015. At the time, Mark DeYoung, Vista Outdoor chairman, CEO, emphasized the company would continue to “support all our brands with organic, innovative solutions and strive for growth and value.”

“At the same time, we will continue our proven track record to be able to buy great branded companies and take them to market in a way that increases the value to our shareholders, supports the importance of our employees and drives a better solution for our customers,” DeYoung said.

Since mid-2015, Vista Outdoor has acquired four companies. In July 2015, the company purchased privately owned Jimmy Styks LLC, a major designer and marketer of stand-up paddleboards and related accessories, for approximately $40 million.

In August 2015, Vista Outdoor acquired CamelBak Products LLC, a leading provider of personal hydration, for $412.5 million.

In February 2016, BRG Sports’ Action Sports division became part of Vista’s portfolio at a price of $400 million. The division included Bell and Giro and C-Preme and Blackburn, market-leading brands in the cycling, snow sports and powersports market.

In September 2016, Vista purchased Camp Chef, a leader in outdoor cooking products, for $74 million.

Several of Vista Outdoor’s acquisitions have puzzled some in the industry.

“Some of the acquisitions we’ve done might have been a bit of a surprise to people that hadn’t really understood the vision of Vista Outdoor — when they see us buying a paddleboard company or CamelBak, which is in hiking, biking, skiing and backpacking. It may have caught a few people who hadn’t paid attention by surprise, but it shouldn’t have because the strategy is individual, outdoor recreation,” DeYoung said.

Vista Outdoor will continue to add additional companies to its portfolio. It’s part of their DNA.

S&W Goes Accessory Heavy

Smith & Wesson Holding Corp. captured headlines and the attention of Wall Street investors when it acquired Battenfeld Technologies for $130.5 million in Dec. 2014. S&W was instantly heavy into accessories, with numerous brands, including Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies and Lockdown Vault Accessories.

“[This acquisition] allows us to move more strongly into the hunting vertical, as well as establish a strong platform for growth in our existing firearm accessories business, which has been a small but highly profitable part of our company,” said James Debney, S&W president, CEO.

In July 2016, S&W announced it was acquiring the well-known laser sights company Crimson Trace for $95 million, and that Battenfeld was purchasing Taylor Brands, a designer and distributor of knives and specialty tools, for $85 million.

“Crimson Trace provides us with an exceptional opportunity to acquire a thriving company that is completely aligned with our strategy to become a leader in the market for shooting, hunting and rugged outdoor enthusiasts,” Debney said. “Taylor Brands provides us with an ideal opportunity to further deliver on an important element of our strategic plan, which is to grow our Accessories Division by expanding into adjacent and complementary markets.”

What impact have the acquisitions had on S&W? In September 2016, S&W, in reporting its 2017 first quarter results, announced a new product segment.

“In line with our expanding presence in the market for rugged outdoors products, we have made the decision to position our Accessories Division and our new Electro-Optics Division under a segment named Outdoor Products & Accessories, in order to better reflect the large and growing addressable market for those offerings,” said Jeffrey Buchanan, S&W executive VP, CFO, chief administrative officer.

If you follow S&W, you’ve undoubtedly noted “rugged outdoor enthusiasts” and “expanding into adjacent and complementary markets” — clear signals the company will continue to expand its market reach with additional acquisitions.

And they have. In November, S&W announced its Outdoor Products & Accessories segment was acquiring Ultimate Survival Technologies for $32.2 million.

Acquisition Environment

The industry has experienced growth in recent years, with many large companies growing within their product specialties, and many new companies establishing solid reputations and attention-getting probability.

This has created an acquisition-ripe environment: Companies, large and small, looking to expand their market reach, usually outside their primary product lines.

Acquisitions: Yes, they will continue and increase in 2017.

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