MadFiber, Serotta and Blue Now Owned by Divine Cycling

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HammerTime2
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by HammerTime2

50 year old dentists now to be riding MadFibers on their Serottas? Well, supposedly, MadFiber, Serotta and Blue are maintaining individual brand identities under their current management teams.

Bicycle Retailer:Serotta, Blue and Mad Fiber consolidated under Divine Cycling Group wrote:Serotta and Blue Competition Cycles are joining Mad Fiber Wheels under the umbrella of the Divine Cycling Group, an investment group formed last year. DCG bought Mad Fiber, its first industry acquisition, in February.

Terms of the agreement were not released except that Blue and Serotta shareholders will become shareholders in DCG and be represented on DCG's board.

Serotta was founded in 1972 by Ben Serotta. The company has been through several iterations. Last year Serotta announced it had "partnered" with financial services group Bradway Capital.

Likewise, Georgia-based Blue was acquired by an equity firm, Lake Rudd Capital Partner, late last year.

In a statement, DCG founder Gary Ullman said, “Collectively, these companies bring together manufacturing expertise across materials and product categories and extensive aerodynamics expertise. They combine American manufacturing knowledge with significant experience operating in Taiwan and elsewhere in Asia. The three businesses’ sales forces cover all major cycling markets, and utilize the best combinations of traditional distributors, dedicated sales offices, trading partners and representatives.

"And they are now brought together under a board that has world class experience in acquisition and strategic integration such that they will be able to better attract investment, more rapidly grow product lines and profitability, and benefit from combined strengths while maintaining individual brand identities under their current management teams. This, as DCG Inc continues its commitment to growth through acquisition and further builds the company.”

Ullman said each company will maintain its current production facilities.

Watch for more on this story Wednesday.
Only on seeing this story did I find out that MadFiber was acquired by Divine Cycling Group earlier this year.

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thatdkid
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by thatdkid

Interesting to here. But in this day and age, it is good to see small companies "working together". Instead of just getting lumped in with some big corporation. Only time will tell if this works or it doesn't.

First things first Divine Cycling Group needs to hire a new web designer. Their web site is bad...

by Weenie


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Wingnut
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by Wingnut

I don't know...I rather see this as being lumped together, brands end up getting watered down and losing their core values and identity...look what happened to Merlin Metal Works previously.

I'd much rather support the small, independent manufacturers...
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giant man
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by giant man

yes their web site is cack, needs someone on it who knows what they're doing imo ...

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elviento
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by elviento

Based on a quick search, DCG seems to be basically a bunch of private equity guys who are financial types and not bike types (at least not bike engineers). So it remains to be seen if the key guys at MF will leave after cashing out.

The bike industry is one where the owner's philosophy, know-how and approach have a huge bearing on the success of the company, so unless the kep people can be retained and also on some sort of incentive, acquisitions could be disastrous.
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kbbpll
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by kbbpll

Bicycle maker to close Saratoga Springs factory
Serotta to shut down later this month; owner plans a restructuring
http://www.timesunion.com/business/arti ... 700263.php

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elviento
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by elviento

If the dentists are still buying them, then they'd probably be doing well now.
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Wingnut
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by Wingnut

I think they priced themselves out of the market...you could apparently buy a Parlee or Crumpton for a lot lot less...
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HammerTime2
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by HammerTime2

More info on Serottagate. I wonder what this portends (if anything) for Mad Fiber?

Summary:
1) Serotta (the guy) and Serotta CEO (Watkins) fired by Divine Cycling group, and Serotta (the guy) is pissed.
2) Serotta (the company) to do contract manufacturing (not sure about also under Serotta brand?).
3) Dueling accounts put out last week by Divine Cycling Group and Serotta (the guy)/Serotta CEO about what was happening.

http://saratogian.com/articles/2013/08/08/news/doc520432b2452a6615658295.txt?viewmode=fullstory wrote:...
In a press release earlier this week, the new management reported it is aiming to expand production at the Saratoga Springs facility. Under a plan to restructure the business, they plan to produce bicycles for other companies.

This news came as a surprise to Ben Serotta, who started the firm in 1972, and to Watkins, who came on board as DCG’s interim CEO in October 2012.

“We had no clue about the contract manufacturing,” Watkins said, adding that direction might prove difficult for DCG. “The Serotta craftsmen are wonderful people. I have the deepest respect and admiration for them. They build in bikes what Ferrari builds in cars. Ferrari wouldn’t want to build some little Chevy car.”

Serotta and Watkins said they were startled again when they were both terminated without cause — Sunday and Monday, respectively.

“My cell phone rang, and I instinctively answered it,” Serotta wrote in a letter to The Saratogian Thursday. “One of the current company owners was on the other end, and he coldly stated, ‘I am terminating you. Your email password has been changed and your building access code has been deleted. You can arrange to get your personal things Tuesday.’ And with that (no cause was given), my life at Serotta, the company, came to an abrupt end.”

Watkins said his own dismissal came by way of a voice mail and a text.

...

A less colorful account here
http://www.bizjournals.com/albany/news/2013/08/07/new-management-contract-revenue-part.html wrote:...
The company, which last week laid off 40 percent of its workforce, became part of Divine Cycling Group Inc. in mid-June. DCG has implemented a restructuring plan that includes seeking contracts to build bikes for other brands, said Brian Case, a DCG director.
...
Ben Serotta, who founded Serotta in 1972, left the company as part of the management transition. CEO Bill Watkins, who joined Serotta less than a year ago, also has resigned.

...
Bicycle Retailer articles from last week with Serotta/Serotta management point of view http://www.bicycleretailer.com/north-america/2013/07/31/serotta-lays-40-workforce-planning-shutdown#.UgUWIT8pj4h and http://www.bicycleretailer.com/north-america/2013/07/31/ben-serotta-i-will-build-bikes-another-day#.UgUgDz8pj4g , somewhat contrasting with Divine Cycling Group]s account of developments.

Serotta's "farewell" letter: http://www.bicycleretailer.com/north-america/2013/08/07/ben-serottas-letter-cycling-community#.UgUuLD8pj4g

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HammerTime2
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by HammerTime2

Another article on Serotta's plight: http://redkiteprayer.com/2013/08/serotta-beheaded/.

I don't necessarily put much stock in the following, but anywho
http://redkiteprayer.com/2013/08/serotta-beheaded/ wrote:So what of Divine Cycling Group’s other properties, Mad Fiber and Blue Competition Cycles? Well, Mad Fiber reports that all is well, nothing to see here. Maybe things are fine, but it’s hard to take that statement on face value once you read what Steven Harad, CEO of Blue, wrote in the comments following Serotta’s letter to the cycling community.

“Here’s hoping we aren’t next but it looks like we are. Lets catch up Ben Serotta.”


Word in the industry is that Blue has a shipping container full of bikes that they can’t pay for, which brings us back to one of the initial reports about just how bad things were at Serotta. Serotta said he had no operating capital for the company. An injection of capital which was to have materialized, did not.

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CBJ
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by CBJ

So they are buying up companies to then close them down?

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micky
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by micky

Or buying the brand names and then move elsewhere?

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HammerTime2
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by HammerTime2

Comments in red by the former Serotta CEO, who was fired by the most recently fired Serotta CEO who replaced him, and who is none too fond of Ben Serotta or that (now fired) CEO who replaced him.
Bustednuckle in http://forum.cyclingnews.com/showthread.php?p=1314521#post1314521 wrote:Posted on another forum..a somewhat contradictory view from those 'oh, how sad', comments elsewhere.

Quote-"Originally Posted by weatherman View Post
Yes, it certainly does seem there is 'another' side to this story--the following was posted by Howard Berkowitz on Facebook this morning (in response to comments about the Serotta situation). Recall that Howard was the interim CEO of Serotta and was rather unceremoniously fired by Bill upon his arrival. (From what I understand, I think he got just about the same treatment that Ben/Bill received, perhaps worse as I think his access was just shut down and no one even told him about it.)

Pasted comments:


Rich, for whatever reason I cannot leave a comment on the story about Ben Serotta in which you mentioned my name. Here is my take:
Unfortunately, in the years I have known Ben I have learned that the truth is a vague thing to him and the messaging serves his personal purpose. Without a doubt, he is one of the greatest bike innovators of the modern age, although he has done little innovating in the last decade. That said, his skills in running the business are non existent. The current owners took the company from the bank right before foreclosure do to that mismanagement in early 2012.
As far as the claims in the "letter"; he was not fired "without cause". Actually there was "cause" and I understand that it was detailed in the written correspondence he received to that effect. Secondly, Bill Watkins does not have the skill set to run the company. In fact, since he arrived less than one year ago, he alienated the entire staff (all of the artisans), wasted money on painting the inside of the factory and other such nonsense, and did not put any effort into building revenue with actual an SALES EFFORT. No on at 41 Geyser likes or respects him except Ben. That says it all.
The fact is that Ben and Bill were seemingly bent on a management takeover and were devaluing the company so they could get it cheap. That was the reason for the unauthorized, negative interviews they both gave to industry rags a couple of weeks ago.
I am only one guy and this is only my opinion so take it for what it is worth."

Interestingly, the quoted thread started in October 2011 with speculation that Serotta was going under.

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53x12
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by 53x12

Man what a mess.
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by Weenie


Mr.Gib
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by Mr.Gib

There is nothing at all unusual about this situation. Ben Serotta was into bikes and came up with some great stuff. The industry evolves and Ben lacks the tools to evolve himself and to run the business to be competitive. So many start-ups suffer this same fate. The ones that succeed are those that recognize the need for professional management. To top it off the guy sounds like a bit of douche. No great loss IMO.
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