Native Instruments file for insolvency...

[Gribs]

The debt comes from a leveraged buyout by Francisco partners. A search tells me that the buyout was supported by EMH Partners, who owned a majority share, and NI founding shareholders. If EMH Partners held controlling shares, then I don’t know if there was much the founding shareholders could have done other than take their money and go home. Leveraged buyouts basically saddle the debt for buying the company onto the company itself. They should, in my rather strong opinion, be illegal at national and international levels.

It appears that the people who orchestrated the buyout and who were given responsibility to run NI have failed to squeeze out sufficient capital to buy down and/or service the debt. I hope that the insolvency can be resolved without initiating bankruptcy.

Bad business decisions that set NI down this road came prior to all of this. Personally, I feel that the dumb decisions began in full force when NI dumped Kore to focus on Maschine. A customer base was angered and/or lost, customer trust and confidence in future products were lost, and a very good and maturing idea was essentially shelved indefinitely though some echos might be found in NKS tech. I owned Kore 2 and Maschine V1 systems, and when Kore was killed I stopped buying and learning NI software-dependent hardware. They never even released a NKS controller independent of a Keyboard, which could have been the only hardware to tempt me again.

[machinesworking]

..... I hope that the insolvency can be resolved without initiating bankruptcy.

Bad business decisions that set NI down this road came prior to all of this. Personally, I feel that the dumb decisions began in full force when NI dumped Kore to focus on Maschine. A customer base was angered and/or lost, customer trust and confidence in future products were lost, and a very good and maturing idea was essentially shelved indefinitely though some echos might be found in NKS tech. I owned Kore 2 and Maschine V1 systems, and when Kore was killed I stopped buying and learning NI software-dependent hardware. They never even released a NKS controller independent of a Keyboard, which could have been the only hardware to tempt me again.

I was a huge fan of Kore, but I think one thing that happens with these larger companies that never really gets mentioned is developers leave, core developers. Kore may well have been the blowback from a key programmer exiting stage left. we saw that recently with Absynth, the developer started making his own synths again, and NI nearly abandoned it. They did end up rehiring Brian Clevingger who developed Absynth for version 6, but who knows?

It's one thing positive to be said about smaller companies like U-He, they will eventually get around to upgrading old code etc. Even Arturia has Spark etc. There are other examples as well, MOTU developed MachFive in partnership with UVI, but UVI eventually decided to end that partnership and use the code for Falcon. MOTU had a slew of instruments BPM, Ethno etc. that wer UVI based and now only partially work in UVI Player etc.

[SoftSynthLover99]

Infinite growth mindset is the death of any company. And I think that is what got NI in trouble like this. Instead of just keeping the core of your products fully functional and updated/modern companies start trying to cater to all these different markets and end up losing themselves in the process. NI has always been profitable, they just took on way too much debt in a bad business decision.

Kontakt is industry standard for sample libraries, Battery was once industry standard for drum sampling (and probably still is it’s just not being updated) and Reaktor, Massive FM8 Absynth all the classic NI instruments are so good.

I really hope they make it out of this thing ok and start to really focus on what they did best. Absynth 6 was a good sign and I think once everything settles we will see NI back to normal. NKS, Kontakt and the NI ecosystem is not going anywhere IMO.

Battery 5
Reaktor 7
FM8 2
Massive (original) successor (not a fan of massive X)
Kontakt 9

Updated FX plugins, they will be ok.

[Sascha Franck]

I really hope they make it out of this thing ok and start to really focus on what they did best.

For that to materialize, *if* NI continues to exist as a company at all, the first thing to happen needs to be that Nick Williams dude being fired. They should've done that years ago.

[Etienne1973]

NI acquired other companies not too long ago. Could that have been the negative financial turning point for NI? Definitely a failure in the top decision department?

[digitalboytn]

NI acquired other companies not too long ago. Could that have been the negative financial turning point for NI? Definitely a failure in the top decision department?

I had a gut feeling that they were going to be in trouble was when they borrowed heavily to buy Loopcloud and tried desperately to make it work...

The terms and agreements for the equity are always slated in favour of the lender and I knew that the PE company was soon going to be the majority shareholder of NI....

It's not rocket science and the writing was clearly on the wall back then

[alreadyburnt]

When 70% discount?

[swilow11]

NKS, Kontakt and the NI ecosystem is not going anywhere IMO.

Battery 5
Reaktor 7
FM8 2
Massive (original) successor (not a fan of massive X)
Kontakt 9

Updated FX plugins, they will be ok.

I simply do not understand why people keep saying this. They are currently unable to finance their massive debt. What about that makes you think "they will be okay"?

They got into this problem even while having "industry standard" products. If these products were not enough for them to avoid massive debt, and we're now entering a world where plugin development is almost within the reach of anyone with a relatively cheap subscription to Claude Code, how exactly do they get out of this? Their products are probably devaluing by the day, not because they're not good products, but because of relatively simple supply and demand logistics.

Losing Kontakt will be a massive headache for the industry. A $250 million dollar headache? Hell no. I truly do not think anyone is going to intervene simply to save our workflows. The problem is absolutely massive. There is no real future where NI turn this around to compensate the bodies they are indebted to and start turning an actual profit. Any intervention we hope for now is almost centred on the sentimental value NI have for many of us.

I obviously don't know what will happen but I think this strange optimism in the face of literal insolvency is close to delusional.

[SLiC]

If company goes bust the debt will go and the IP can still be sold (for very little, whatever people offer) to bay back debtors (pennies on the pound). Someone could end up owning the NI stuff for very little and debt free.

[Gribs]

..... I hope that the insolvency can be resolved without initiating bankruptcy.

Bad business decisions that set NI down this road came prior to all of this. Personally, I feel that the dumb decisions began in full force when NI dumped Kore to focus on Maschine. A customer base was angered and/or lost, customer trust and confidence in future products were lost, and a very good and maturing idea was essentially shelved indefinitely though some echos might be found in NKS tech. I owned Kore 2 and Maschine V1 systems, and when Kore was killed I stopped buying and learning NI software-dependent hardware. They never even released a NKS controller independent of a Keyboard, which could have been the only hardware to tempt me again.

I was a huge fan of Kore, but I think one thing that happens with these larger companies that never really gets mentioned is developers leave, core developers. Kore may well have been the blowback from a key programmer exiting stage left. we saw that recently with Absynth, the developer started making his own synths again, and NI nearly abandoned it. They did end up rehiring Brian Clevingger who developed Absynth for version 6, but who knows?

It's one thing positive to be said about smaller companies like U-He, they will eventually get around to upgrading old code etc. Even Arturia has Spark etc. There are other examples as well, MOTU developed MachFive in partnership with UVI, but UVI eventually decided to end that partnership and use the code for Falcon. MOTU had a slew of instruments BPM, Ethno etc. that wer UVI based and now only partially work in UVI Player etc.

Yeah, relying on a single programmer/developer for too much is a tactical blunder once a product reaches a certain scope and/or number of customers. No company is a safe bet, too, even U-He. We saw Camel Audio get absorbed by Apple and LinPlug disappear entirely. Sure their code still can work in many cases, but development stopped entirely. I think it is really cool that Vember Audio (Claes Johanson) released its Surge codebase as open source. It is pretty amazing to me how far people have taken it, including all of the VCV-Rack modules.

The older I become, and I am 60+ and retired now already, the more I lean towards open and free stuff. There is much sample content buried in encrypted Kontakt libraries, but I don't know if there is a path to releasing decrypted files by the companies that developed them or any stomach at some point in the future for making Kontakt open source. It is similar for Reaktor. The contributed user library is incredible, but IDK if an open source Reaktor can ever happen.

[SoftSynthLover99]

NKS, Kontakt and the NI ecosystem is not going anywhere IMO.

Battery 5
Reaktor 7
FM8 2
Massive (original) successor (not a fan of massive X)
Kontakt 9

Updated FX plugins, they will be ok.

I simply do not understand why people keep saying this. They are currently unable to finance their massive debt. What about that makes you think "they will be okay"?

Many companies have done this including Apple, Marvel, American Airlines to name a few. And only after bankruptcy did these companies turn into what people see today which is extremely profitable companies.

Now I’m not saying NI will become Marvel or Apple but they not only have industry standard software like Kontakt, but a strong foothold in the hardware market with the NKS compatibility and midi controllers. If people think this entire ecosystem (which is highly profitable btw) is just gonna disappear because of debt, I find that very hard to believe. A company like NI has a huge stake in music production and creation and countless brands rely on Kontakt and the NKS ecosystem to even exist. So to me I would be more shocked if NI went away vs survived and became a better version of itself.

They just need to make better business decisions and maybe hire better leaders who actually make smart business decisions that don’t put them in debt. They are not in this predicament because they weren’t turning a profit, the are in this predicament because someone at NI royally screwed up and put them in a horrible situation by taking on more debt than they could handle. At least from the outside looking in that’s what it seems like to me.

Most companies don’t bounce back from something like this when they become irrelevant. NI as a company is still highly relevant in software and hardware.

[FigBug]

I simply do not understand why people keep saying this. They are currently unable to finance their massive debt. What about that makes you think "they will be okay"?

"They" as in Native Instruments the corporation might not be ok, but I'm pretty sure the products will live on. They might pull a ROLI, sell what they can, wipe out the current owners equity, shove the rest of the IP into a new company and relaunch.

I worked for Mackie/EAW during their downward spiral. Brands got spun off, pretty much every product line had some value. In the end pretty much everything was sold off until the original company no longer existed.

The bankruptcy trusties need to try and recover some of the debt, if they can only get 10 cents on the dollar then so be it. They aren't going to burn the IP just because they can't recover the full amount of the debt.

[stratology]

Many companies have done this including Apple, Marvel, American Airlines to name a few. And only after bankruptcy did these companies turn into what people see today which is extremely profitable companies.

Apple never filed for bankruptcy.

They were in a tight spot due to poor product strategy decisions in the 1990s.
They did the right thing by bringing Steve Jobs back into the fold.
He streamlined the product line into 4 clear sections: consumer and pro desktop computers, and consumer and pro laptops.

This is nothing at all like what is going on with Native Instruments.

[Cuauhtli]

Visited their site and got a discount voucher/coupon.

[swilow11]

NKS, Kontakt and the NI ecosystem is not going anywhere IMO.

Battery 5
Reaktor 7
FM8 2
Massive (original) successor (not a fan of massive X)
Kontakt 9

Updated FX plugins, they will be ok.

I simply do not understand why people keep saying this. They are currently unable to finance their massive debt. What about that makes you think "they will be okay"?

Many companies have done this including Apple, Marvel, American Airlines to name a few. And only after bankruptcy did these companies turn into what people see today which is extremely profitable companies.

Now I’m not saying NI will become Marvel or Apple but they not only have industry standard software like Kontakt, but a strong foothold in the hardware market with the NKS compatibility and midi controllers. If people think this entire ecosystem (which is highly profitable btw) is just gonna disappear because of debt, I find that very hard to believe. A company like NI has a huge stake in music production and creation and countless brands rely on Kontakt and the NKS ecosystem to even exist. So to me I would be more shocked if NI went away vs survived and became a better version of itself.

They just need to make better business decisions and maybe hire better leaders who actually make smart business decisions that don’t put them in debt. They are not in this predicament because they weren’t turning a profit, the are in this predicament because someone at NI royally screwed up and put them in a horrible situation by taking on more debt than they could handle. At least from the outside looking in that’s what it seems like to me.

Most companies don’t bounce back from something like this when they become irrelevant. NI as a company is still highly relevant in software and hardware.

Fair points

I would just add that the current situation is possibly unlike others because of the joker in the deck- AI. It's not that NI is irrelevant but almost certainly is replaceable and maybe easily. Almost certainly getting easier, at least.

Their deep integration into the musical ecosystem doesn't mean they are indispensable. It might just mean that once this domino falls, many others will too.