Britt Merrick, Dane Reynolds, The Gudangs And Employees Buy Back Channel Islands Surfboards
After 14 years with Burton, CI is coming home.
Back in 2006, Burton snowboards acquired Channel Islands surfboards from revered master craftsman, Al Merrick. Early next year, the brand’s ownership will return to Carpinteria after the sale is closed by Al’s son, Britt, Dane Reynolds, the Gudauskas brothers, and a bunch of CI employees.
While the sale figure is unknown, rumors have circulated that the purchase price was around $6m and the major shareholder is Britt Merrick, who will also serve as CEO.
“For my family and all of us at Burton, this is a very happy ending to Burton’s chapter in the Channel Islands Surfboards’ history,” said Donna Carpenter, widow of iconic snowboarder and Burton founder, Jake Burton. Jake sadly died 12 months ago after complications with cancer. According to insiders, Jake was the driving force behind the CI acquisition due to his love of surfing. Since his death and despite the best-in-a-year performance of CI, Burton wanted to focus on Burton’s core competence of snowboarding as opposed to surfing. Reports have detailed the split as being amicable with insiders detailing Burton had always hoped the business would end up back in the hands of the Merricks.
Mergers and acquisitions are tricky. There are some flawless case studies, like Facebook buying Instagram, but historically, 70% to 90% of acquisitions don’t work. We’d know. We sold Stab sold to the publicly-listed SurfStitch in 2015. By the end of 2017, the Stab can had been kicked back across the fence and told not to come back. The regular paycheque and not having the anxiety created by money washing in and out is one of the great draws of selling (not to mention enjoying a “liquidity event”), but in our experience, as wonderful as the company was, being placed into a new business can make you feel like a domesticated animal. The energy of a buyback can give you that startup chemistry once again, which can only be a good thing for CI.
The most reflexive assumption to Burton unloading CI would be that the business was bleeding cash. According to management, Channel Islands is in the midst of its most profitable year in over a decade. Like being in the game of camping, cycling, and the outdoors, 2020 has been an outstanding year of business for board builders. As they have in the past, the brand will continue to make every board locally, as they haven’t closed shop to centralise all production in Asia.
The most interesting part of this acquisition is the inclusion of the surfers as shareholders.
We’ve seen varying degrees of surfer influence on the success of apparel brands. Would Quiksilver, Billabong, and Rip Curl have been the juggernauts of yesteryear without their heavily-stacked team rosters? Maybe, maybe not. Even Hurley’s $8m a year squadron of superpilots couldn’t guarantee them success. And, you’d think the commercial success of Dane Reynolds’ and Kelly Slater’s apparel brands would be flying given their influence.
With hardware, it’s more clear-cut. Surfer validation is a mark of a brand’s success and this move is an inspired one. We will have a detailed breakdown shortly on which surfers invested.
CI also believes this has been part of their special sauce. The press release reads:
The driving force behind the brand’s success is greatly attributed to its star-studded team of surfers that worked closely with them to create and build the world’s best surf- boards designed to help them win competitions and world championships. Over the past four decades, Channel Islands Surfboards has helped surfers like Kelly Slater, Tom Cur- ren, Lisa Anderson, Kim Mearig, Adriano De Souza, and Sofia Mulánovich earn a combined total of 20 World Champion titles. Today, surfers such as Dane Reynolds, Lakey Peterson, Mikey February, Parker Coffin, Sage Erickson, Bobby Martinez, the Gudauskas brothers, Yadin Nicol, Eithan Osborne, and many more continue to build on that legacy, with another wave of young talents like Taj Lindblad, Alyssa Spencer and Luke Swanson right behind them looking poised to help Channel Islands deliver even bigger things in the years to come.
Although there is a lot of competition for that top position in the surfboard market, a reader survey conducted by Stab last month named Channel Islands Surfboards as their favorite board brand of 2020. Additionally, Channel Islands is in the midst of one of its most profitable years in over a decade thanks to popular designs like the FishBeard, Happy and Rocket Wide—as well as a next-level flex technology known as Spine-Tek.
“I literally grew up in my mom and dad’s surfboard factory, and was there to see how hard they and their whole family of employees worked to make Channel Islands one of the most highly regarded board builders in the world,” recalls CI Surfboards new CEO Britt Merrick. “When Burton partnered with us, they provided an incredible amount of support and shared their knowledge, which ultimately helped us to keep building the best boards possible right here at home in Carpinteria, California. This opportunity to take over ownership with my life-long friends that work here as well as having co-ownership with many of our top team riders is a dream come true for me and has us all super pumped for what the future holds.”
According to the release, the transaction from Burton Snowboards to CI Surfboards LLC is expected to be complete by early 2021, subject to customary closing conditions. All employees and surf team contracts will remain.
Whether it’s the rationalisation of an amicable and fair sale, the businesses not being taken over by private equity or being unloaded in a firesale, or a trend of surfers themselves becoming owners of more surf brands, this story has a really good feel to it.
Stab wishes the team well and hopes The Merricks have enjoyed 14 years of uninterrupted sleep. Small biz is tricky and we certainly can’t predict the same in the future.
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