Bought and sold

Normally I don’t crosspost, but today’s post in Does Size Matter? seemed like one that also needed to be here. Here’s a snippet, go read the rest:

This piece from BusinessWeek confirms it today, that Flextronics  has sold frog, along with their Indian software arm – currently India’s largest leveraged buyout – to a private venture equity firm called  KKR.

Is this a trend in the design industry? And if so, what?

In the last 6 days, Laga bought One80 Design LLC and Product Development Technologies buys MQube Design.
Clear sign of consolidation, since the buyer and seller in these two
sales are more or less operating in the same industry, the design
industry, and both the buyers are based in Chicago. Interesting little
pattern emerging there, in it’s own right, if you look at it in the
context of Chicago’s place in the middle of America’s manufacturing
heartland and the corresponding changes globally with the shift of
manufacturing away from the United States.

In fact, here are snippets from Laga’s press release,

The One80 Design acquisition is part of Barrett’s commitment to aggressively grow laga organically, and he plans more strategic acquisitions in the future. "This industry is ripe to bring together complementary design talent that offers robust solutions to clients."

and from PDT‘s,

PDT is headed for more growth, scouting for design firms on
the West Coast. It was purchased last year by TZ Ltd., which is traded
on the Australian Stock Exchange. Having the capital from a public
company will give PDT an even bigger platform to grow, Schwartz said.

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2 Responses to Bought and sold

  1. atrakasya says:

    It would be intersting to trace out the funding entities behind recent design-related takeovers.
    KKR was the same fund that purchased Alias and sold it to Autodesk after an year, for about twice the price they bought it for, if I recall correctly?
    Is it possible to trace the financial/industrial entities that have the highest investment, as well as previously recorded investments in privatel design entities (not corporate in-house design firms)?
    Such data would be quite useful to see who is profiting and how.
    Even a top-end entity like IDEO – their turnover is not really something that would make a big VC look twice.
    However, the oft repeated saw that design creates value, and value is what creates trade, would indicate that design consultancies should be sitting at the top of the value chain.
    If so, then why are the world’s top-most design firms notched at such tiny amounts? Are they lacking in building company valuation by creating proprietary IPR? Are they undercutting themselves?
    Or does the world really not value design and is it just a myth that designers like to tell themselves – that they really create enormous value for the industry?
    Did KKR create 100% more value for Alias in one year, which allowed them to make profits? Or, were the pervious Alias owners just undervaluing their product?
    I find that there is a serious lack of facts and figures on design as a business.

  2. niti bhan says:

    the data is out there, you just have to look for it. and a lot of these questions are being addressed regularly. google is your friend 🙂

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