Native Instruments file for insolvency...

[Weasel-Boy]

The best case scenario if NI is to be sold in bankruptcy is for another entity in the music software market to buy it who isn't already in that space and continue to develop it.

And only if they can get it for pennies on the dollar. Other than some of the larger players already mentioned here...I can't think of anyone else who really has the kind of money to pick this company up at the current debt cost the banks are looking for.

[Albert.VST]

The debt burden is the real problem because there is still real value in the product line...

This is where administration/bankruptcy comes in. If no-one is willing to take that debt on, the banks wind up having to accept a haircut or they get nothing.

Even a fairly generous calculation of company value based on earnings points to the banks getting only half of that €300m debt repaid. And maybe not even upfront. They will no doubt complain and turn round a week later to lend FP another chunk of money for some other scheme.

It really depends where the debt is. Is it one bank only that could save them, seen that before (though in other branches). In that case the bank could take over full control, in fact become the new owner, replace management and try to make it profitable again. If it will be they will sell it (maybe again to VC/PE ).
Worse is if the debt is to multiple parties. Which of them will be able to take control, will the others allow it without getting money now, on which terms etc. Then full bankruptcy is a likely outcome.

[Essent]

Why does this have to happen just when I'm considering purchasing Reaktor?

After resisting modular synthesis for a long time I finally accept I need it.

[IvyBirds]

The best case scenario if NI is to be sold in bankruptcy is for another entity in the music software market to buy it who isn't already in that space and continue to develop it.

And only if they can get it for pennies on the dollar. Other than some of the larger players already mentioned here...I can't think of anyone else who really has the kind of money to pick this company up at the current debt cost the banks are looking for.

If NI really has 300 million in debt, no one is going to buy them and assume that debt

If they had that kind of cash they could hire an army of the worlds top DSP developers and make their own plugins and hire the world's best marketing team and market it, and then have hundreds of millions left over

[dayjob]

I was just wondering

Maybe Microsoft might even be a player here ?

God forbid...

[copilot] would you like to save your reaktor ensemble to onedrive?
[user] no. C drive only.
[copilot] OK. your reaktor ensemble has been saved to onedrive?
[user] copilot, how can i disable onedrive?
[copilot] OK. onedrive has been erased. what else can i help you with today?

[bermudagold]

The best case scenario if NI is to be sold in bankruptcy is for another entity in the music software market to buy it who isn't already in that space and continue to develop it.

And only if they can get it for pennies on the dollar. Other than some of the larger players already mentioned here...I can't think of anyone else who really has the kind of money to pick this company up at the current debt cost the banks are looking for.

If NI really has 300 million in debt, no one is going to buy them and assume that debt

If they had that kind of cash they could hire an army of the worlds top DSP developers and make their own plugins and hire the world's best marketing team and market it, and then have hundreds of millions left over

but isn't that what they did?...most of komplete is outsourced at this point...they only started getting noticed in my circle when they started outsourcing...first with scarbee and then softube...since then its all the tim exile stuff, the twisted tools stuff, razor, form, most of the stock kontakt instruments, half the Play series including all of the light trilogy, absynth,...now it seems they to want to pivot to AI...partnering with audialab and datamind to represent their existing products.

so other than reaktor blocks/primes and massive x,...in all the years before the kontakt rebranding launch,...software wise what have they been using all the in house IP on?...what have they been spending all the money on?...was it all allocated to the hardware and the software for the hardware, kontrol/maschine/traktor?

[digitalboytn]

What have they been spending all the money on?

The bean counters and the experts in the management department

They've done a great job of sailing the ship onto the rocks

[dayjob]

What have they been spending all the money on?

The bean counters and the experts in the management department

They've done a great job of sailing the ship onto the rocks

marketing and hardware development, which is expensive. also, one thing venture capital does is buy a company then move the debt from the purchase to that company.

[VitaminD]

I've seen estimates online of between 400 and 600 employees at NI. Why?

Steinberg apparently has around 200 employees, Arturia seems to be about the same. If the numbers are correct, why does Native Instruments have 2 to 3 times that? I suspect the corporate structure is too top heavy. One way a company can have a boat anchor holding down profit is by having too many salaries to pay. That's going to be the bulk of corporate overhead.

They probably don't need a big marketing department. Social media can be cheap and effective these days. Especially for a large, established brand. Strategic growth executives probably shouldn't be a job when it seems they've failed at their job if the company is actually 300 Million in debt. The only thing they've strategically grown IS the debt.

They need a Strategic Cost Reduction Manager.

[Weasel-Boy]

They need a Strategic Cost Reduction Manager.

Way too late for that.

[Essent]

I'm surprised to find U-He's Diva on their site when you go to "instruments". What is the deal with that?

[PieBerger]

I'm surprised to find U-He's Diva on their site when you go to "instruments". What is the deal with that?

Diva is NKS compatible

[Sindikhate]

I'm surprised to find U-He's Diva on their site when you go to "instruments". What is the deal with that?

NKS parther

[kraster]

The best case scenario if NI is to be sold in bankruptcy is for another entity in the music software market to buy it who isn't already in that space and continue to develop it.

And only if they can get it for pennies on the dollar. Other than some of the larger players already mentioned here...I can't think of anyone else who really has the kind of money to pick this company up at the current debt cost the banks are looking for.

If NI really has 300 million in debt, no one is going to buy them and assume that debt

If they had that kind of cash they could hire an army of the worlds top DSP developers and make their own plugins and hire the world's best marketing team and market it, and then have hundreds of millions left over

The debt is mostly coming from the PE deal.

The PE fronts a small slice of the capital and the rest is negotiated with creditors. A holding company is formed and that company buys the target company. This company contains both the private capital and the debt owed to creditors.

Once the sale goes through the holding company is integrated with the target company either through a merger or by becoming a subsidiary. Either way the target company assumes all the debt used to buy it. This is mandatory.

This is what happened with NI. PE works best with companies that are boring and predictable like utilities and not so much with creative companies that can be more susceptible to market fluctuations.

In this case, because the cited 300 million debt is mostly going to be PE debt from the LBO and the acquisitions of Izotope and PA the insolvency will almost certainly tell the creditors that they're going to have to take a haircut because part of PE is assuming the risk that this will happen.

The small slice of equity capital by SF Partners will be certainly wiped out and the senior creditors will most likely get a debt to equity swap.

There's a pervasive notion here that NI are a completely valueless ongoing concern. They're one of the biggest and most recognisable music software brands with a bunch of valued IPs.

Bankruptcy and liquidating the company would yield a lot less than wiping the debt and creditors assuming ownership of a restructured company. It would be a nonsensical move.

In other words NI are much more valuable as a whole than the sum of their parts.

Besides, German insolvency policy strongly favours rescuing companies over liquidation.

[kraster]

What have they been spending all the money on?

The bean counters and the experts in the management department

They've done a great job of sailing the ship onto the rocks

marketing and hardware development, which is expensive. also, one thing venture capital does is buy a company then move the debt from the purchase to that company.

That's Private Equity.

Venture Capital typically invests equity into early-stage companies and doesn’t load them with acquisition debt. The payoff is that if the company does well they have a fully owned stake in the company. No debt to service etc.

PE, by contrast, often uses leverage to finance acquisitions, and the acquired company ends up servicing that debt.