In July of 2011, Steinway & Sons began pursuing the possible sale of the company in order to stem a few financial losses that were dragging the company below where it wanted to be in the earliest years of the 21st century. The process of finding a potential buyer began immediately, and it continued through the end of 2012. Just before the dawn of the new year, however, company officials announced that Steinway would no longer be offered for sale, and that it would remain unchanged in its current format.
Steinway’s Reluctance to Sell is a Big Departure from the Company Line
For the past year and a half, Steinway’s sale to an investor or capital firm looked relatively certain. Though there was absolutely no certainly about who would eventually buy the legendary music company based in Waltham, Massachusetts, most people expected a sale announcement shortly after the new year.
Company executives, though, decided to practically sprint in the opposite direction. In addition to not selling the company itself, it was announced that all of Steinway’s various divisions, labels, and brands, would remain intact under the Steinway Musical Instruments, Inc. brand. Earlier, it had been rumored that the company was considering selling off its band instrument division. That won’t happen as part of the most recent announcement.
Motivation Behind Lack of Sale Might Be Recent Earnings
The reason for no longer pursuing a sale of the company has to do with the executive leadership’s believe that more value can be found in financial restructuring than in an all-out sale. That might be partially motivated by news that the company’s third quarter sales were flat, rather than in decline. It may also have to do with a recent 13.1 percent increase in profits, reported by the company to total $29 million.
Pursuing what the company’s CEO calls “strategic financial initiatives” instead of a sale might actually be a good thing. For the past two years or so, Steinway has been pursuing a slightly more controversial strategy in terms of its products and services. The company has been buying and developing a series of iOS and Android applications for smartphones and tablets, and has begun emphasizing many of its smaller brands to supplement the income received from its primary division.
The Status Quo is Good for the Piano Industry
Steinway, despite its flat sales in recent years, remains one of the strongest and most well known brands in the industry. There was significant concern among many professionals that a sale could lessen those attributes, especially if the eventual buyer was more concerned with profits than with the quality and usefulness of the company’s popular musical instruments and tools. That will no longer be a concern. If the company’s strategic changes pay off, this may be the best financial decision Steinway has made in quite some time.