Ktm Venture Capitalist's Exit
KTM CASE SUMMARY
I. Summary of the case
KTM company history
KTM is a designer and manufacturer of motocross, rally and cross-country racing motorcycle that was created in 1934 in Austria. Since that time, KTM maintained a reputation for producing reliable, high quality motorcycle, and for having an expertise in manufacturing core parts. Its marketing focus has always been on building a brand image of a company with technological leadership, high quality products and a legacy of championship titles.
In the late 1980s, propelled by the strong financial markets, a financial investor purchased KTM and took the company private. Though KTM had a good reputation and quality products, it had too many products, inadequate management, and high debt in the books. The company declared bankruptcy in 1991.
At that time, a few of the general importers convinced a group of venture capitalists to save KTM. This resulted in the formation of Cross-Holding, involving Knünz (the current CFO) and Pierer (the current CEO). Their strategy then shifted and the management decided to cut out the general importers and to sell directly through dealers. Soon, the group decided to go public to attract partners who would be willing to grow with the company, thus securing the growth.
Although the company 's share price never dipped below its issue price, a potential takeover bid convinced Pierer & Knünz to go private again. In 1999, BC European Capital invested in return for a 49% stake in KTM.
BC European Capital was one of the largest venture capital firms in Europe with over 15 years of experience involving over 40 acquisitions. The venture capitalist helped the management to acquire new skills and business contacts when needed while still giving a great liberty to the management to pursue their business strategy. In return for their trust, investors were rewarded with a cumulative average growth rate of 31% in revenues and 50% in profits from 1999 to 2002.
In 2002, KTM
I. Summary of the case
KTM company history
KTM is a designer and manufacturer of motocross, rally and cross-country racing motorcycle that was created in 1934 in Austria. Since that time, KTM maintained a reputation for producing reliable, high quality motorcycle, and for having an expertise in manufacturing core parts. Its marketing focus has always been on building a brand image of a company with technological leadership, high quality products and a legacy of championship titles.
In the late 1980s, propelled by the strong financial markets, a financial investor purchased KTM and took the company private. Though KTM had a good reputation and quality products, it had too many products, inadequate management, and high debt in the books. The company declared bankruptcy in 1991.
At that time, a few of the general importers convinced a group of venture capitalists to save KTM. This resulted in the formation of Cross-Holding, involving Knünz (the current CFO) and Pierer (the current CEO). Their strategy then shifted and the management decided to cut out the general importers and to sell directly through dealers. Soon, the group decided to go public to attract partners who would be willing to grow with the company, thus securing the growth.
Although the company 's share price never dipped below its issue price, a potential takeover bid convinced Pierer & Knünz to go private again. In 1999, BC European Capital invested in return for a 49% stake in KTM.
BC European Capital was one of the largest venture capital firms in Europe with over 15 years of experience involving over 40 acquisitions. The venture capitalist helped the management to acquire new skills and business contacts when needed while still giving a great liberty to the management to pursue their business strategy. In return for their trust, investors were rewarded with a cumulative average growth rate of 31% in revenues and 50% in profits from 1999 to 2002.
In 2002, KTM