Author Topic: Blackstone Tactical Opportunities to Acquire the Certified Collectibles Group  (Read 1936 times)

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Offline KeyDate1/2ozPandas

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The implication the cost of grading is going to go up, up, up. 

https://www.ngccoin.com/news/article/9253/

Blackstone (NYSE:BX) announced today that funds managed by its Tactical Opportunities business (“Blackstone”) have agreed to acquire a majority stake in the Certified Collectibles Group (“CCG”) in a transaction valuing the company at more than $500 million. Mark Salzberg, CCG’s founder, and Steven R. Eichenbaum, CCG’s CEO, will retain a significant minority stake. Additional investors in today’s transaction include Roc Nation; Michael Rubin, Founder and Executive Chairman of Fanatics; SC.Holdings, a growth equity platform; Mastry, founded by Rudy Cline-Thomas; Andre Iguodala; Daryl Morey, President of Basketball Operations for the Philadelphia 76ers; and Main Street Advisors, a leading investment advisory firm to prominent athletes, recording artists, and other leaders across entertainment and business.

CCG is a leading, global provider of expert, impartial and tech-enabled services that add value and liquidity to collectibles. Founded in 1987, CCG offers authentication, grading and conservation services that have unlocked billions of dollars in secondary market value. Today, CCG sits at the forefront of the fast-growing global collectibles industry with offices on three continents, robust digital offerings and comprehensive certification services for collectibles.

Blackstone will seek to accelerate CCG’s growth, enabling the company to invest significantly in its current and planned services, adding and training new employees, expanding its geographic and product reach, acquiring new technologies and developing its digital presence. Blackstone is one of the world’s leading investment firms with nearly $650 billion in assets under management and a strong track record of creating value and a positive impact for the companies it acquires and the communities that they serve.

C. C. Melvin Ike, Principal at Blackstone, said: “As thematic investors, we look for exceptional entrepreneurial teams succeeding in growing markets, and CCG is a great example. We have been closely following the rise of the global physical and digital collectibles industry for several years and we were drawn to CCG because of their leadership role in the categories that they serve, and Blackstone’s ability to grow the platform through both organic and inorganic initiatives. We look forward to working together to help the company continue and even accelerate its impressive growth trajectory.”

CCG’s leadership team will remain in place, combining their experience and expertise with Blackstone’s extensive resources. Over the last 35 years, CCG has expanded from collectible coins to comic books, banknotes, magazines, concert posters, stamps, trading cards, sports cards and estate items. CCG has certified more than 62 million of these collectibles, with a combined fair market value approaching $50 billion.

Mark Salzberg, founder of CCG, said: “When I established CCG, I had a vision that we would transform collectibles into an asset class that is trusted by collectors, dealers and investors around the world. It has been incredible to be a part of this journey as we achieved and then exceeded these goals. I am excited to join with Blackstone as we enter the next phase of growth for CCG and the collectibles market.”

“We are thrilled to be partnering with Blackstone during this key point in the industry as the collectibles market continues to accelerate and attract new collectors and investors,” added Steven R. Eichenbaum, CEO at CCG. “From the moment we met the Blackstone team, we could tell that we shared the same vision for the future of our company and the global collectibles industry.”

Goldman Sachs & Co. LLC acted as exclusive financial advisor to CCG. Duane Morris acted as legal advisor to CCG. Weil, Gotshal & Manges acted as lead legal advisor to Blackstone. Golub Capital led the financing for the transaction.

Offline PandaCollector

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Plenty of off-the-record discussion about this today. Thanks Arif.

Best wishes,
Peter Anthony
China Pricepedia — Chinese Coin Prices and` More
The Gold & Silver Panda Coin Buyer’s Guide
Home of the Valentine Panda
PCGS Consultant
www.pandacollector.com

Offline Bsandersen

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Huge move by CGC!  It's going to be very exciting to see where this goes, especially with thoughts of global expansion.

Offline KeyDate1/2ozPandas

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The pressure from collector universe going private with a huge bankroll, put CGC in a tough spot.  I am sure in 5 years we will see blackstone IPO their purchase at 1.5B-$2.0B valuation.

Offline pandamonium

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Basically, for us small fry, the future is rare numismatic coins?......

Offline bonke

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Do you think a collector or investor who has delayed shipping coins to NGC for authentication and grading should do so now to avoid higher prices for these services?  Normally, before an IPO occurs, the private owners push up revenue (and debt).  Increased revenue is easily derived from increased prices for services.

Mark Bonke

Offline Clark Smith

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They may lower prices to capture market share.   Who knows ?

Offline bonke

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Clark

Excellent response to my question.  I never considered the possibility of lower prices.  Very encouraging (from my perspective).

Mark Bonke

Offline comeaux

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I’ve been involved with 4 merger/acquisitions over the last 40 years and currently transitioning through a 5th. All companies and sectors are different but I can say that for the most part, these acquisitions have worked out very well financially for mid-level management thru executive level employees of the company being acquired, two of those I was involved with were exceptional.

What I’ve noticed is that service quality of the acquired company typically falters for several reasons that I won’t go into in order to shorten this post but I’ve seen it happen on 3 different occasions. CCG is aggressively looking for several new personnel/employees which hopefully they can obtain experienced people wherein optimistically they can improve the service quality at CGC which has been lacking.     

The turn-around-times for grading at NGC and CGC are excessively long right now and I’d anticipate even longer going forward. Lower prices would be great but I don’t expect this, when a $70 billion dollar corporation acquires a small company with a small market capitalization you would think that they would let successful operations continue as is/was but that’s not always the case, sometimes they can’t resist getting corporate involved in things they shouldn’t worry about that just screws things up and pisses-off the workforce. We’ll see …       

Offline KeyDate1/2ozPandas

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Collector Universe and CGS, used business is booming of the charts playbook.  Show you have so much demand for your services that backlog is months long, this alerts private equity shops that you need help and they will come in and help but expect a sizable return in the process.  An acquired company that thinks they will have much control of the operations 6 months after the acquisition is usually in for a surprise as the private equity will send in their executive managers to streamline the business.  The biggest challenge is hiring graders, salaries for these graders will have to go up dramatically to get people to quit their entrepreneurial interest and work for a big company.  Now that both companies are in private equity hands, I expect prices to rise at both companies, when you have only two companies price-fixing is very easy when both owners have similar goals, whether that is the case who knows.

Offline comeaux

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An acquired company that thinks they will have much control of the operations 6 months after the acquisition is usually in for a surprise as the private equity will send in their executive managers to streamline the business.
Yes sir Arif this is VERY true. I’ve seen cases in which after 2 years there were no original employees remaining at the acquired company. There is no question that the CCG employees will see a big change. I’ve heard the same words on too many occasions “guys, trust us, nothing will change for you”  :lol: 

In these types of acquisitions, mid to upper level employees typically receive initial huge cash payout. Beyond the initial cash payments … there are also additional retention mechanisms in place to keep key employees for a period of time such as common stock, stock options and cash retention payouts (bonuses) which eventually get exercised over a period of time. Many employees will leave once the retention mechanisms expire and I’ve even seen the highest level managers leave immediately after the cash payout, forgoing any of the retention instruments. Of course there are usually contracts in place to prevent this but those I’ve seen were folded into paper airplanes and sent back to the issuer, they’re worthless once money exchanges hands, trust me I know. Attorneys work wonders …  :biggrin:         

Offline Clark Smith

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Grading time will shorten.

Whether or not there will be a price war on grading fees (lowering prices), I don't know.

Longer grading times and rising prices won't happen together.

Offline comeaux

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Longer grading times and rising prices won't happen together.

It’s already happening …

I haven’t used NGC in quite a while but CGC has recently raised their prices AND their TAT (turn-around-time) which is now anywhere between 4 to 6 months from time of shipping and then returned to submitter. 

If you send in for CCS and then CGC it’s now 291 working days (14 months).  :scared:

It’s all about supply and demand, more and more people are grading collectibles even at higher prices and longer wait times. 

What concerns me is the recent rash of service quality issues which I feel will be compounded by rushing out to quickly hire people just to “throw bodies in the holes” to fill a void, hopefully it’s not a bunch of millennial, basement-dwelling bozos.     

One thing I think should be beneficial (not sure if it will) is the fact that current graded collectibles should have an even higher value for just be graded/authenticated as the buyer is saving grading fees and the excessive time expended to grade/authenticate collectibles.   

Offline pandamonium

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Looks like numismatics will be very popular for the long run as anything rare is getting cash thrown at it.
Matter of time for rare Chinese to see big bucks flood into the market as China's economy grows and they own the gold supply/mines.   He who owns the gold........

Posted here a few years ago the legit graders are PCGS, NGC, ICG and ANACS.

NGC & PCGS will offer more pay to employees of ICG & ANACS or just buy out both companies.   
NGC & PCGS will probably develop a better training/pay program for new graders and become more aggressive in recruiting them.

A grader start up in China uses computer/automation to grade but i doubt NGC & PCGS will do that.   With AI who knows....

Offline cdm collector

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Private equity firms rarely buy companies and lower margins, anything is possible but this it not a likely event bonke. Prices are more likely to go up just like what happened with collectors universe and the purchase
from their PE firm. Blackstone bought this business because the collectable market art, coins, cards, etc are at a 30 year lows and they have pricing power like we haven't seen. Blackstone is one of the smartest groups of investors
out there this is bullish for the collectables market in general and I don't agree clark that lead times and prices don't rise together. Prices rise because demand is so high. As with any business they will keep raising prices as long as the market can support it.