Ktm Venture Capitalist's Exit

 Ktm Enterprise Capitalist’s Get out of Essay

KTM CASE OVERVIEW

I. Brief summary of the case

KTM company history

KTM is actually a designer and manufacturer of motocross, move and cross country racing motorbike that was created in 1934 in Austria. Since that time, KTM maintained a reputation intended for producing reliable, high quality bike, and for having an knowledge in manufacturing main parts. Its marketing concentrate has always been about how to build a brand image of a company with technological leadership, high quality products and a legacy of tournament titles. Back in the 1980s, powered by the good financial marketplaces, a financial investor purchased KTM and had taken the company personal. Though KTM had a very good reputation and quality products, it had too many products, inadequate management, and high personal debt in the ebooks. The company reported bankruptcy in 1991. At that time, several of the general importers convinced several venture capitalists to save KTM. This triggered the formation of Cross-Holding, concerning KnГјnz (the current CFO) and Pierer (the current CEO). All their strategy then simply shifted as well as the management chosen to cut out the overall importers and also to sell directly through sellers. Soon, the group decided to go public to attract partners who does be happy to grow with all the company, therefore securing the expansion. Although the provider's share value never dropped below the issue selling price, a potential takeover bid certain Pierer & KnГјnz to travel private again. In 1999, BC European Capital invested in come back for a 49% stake in KTM. BC European Capital was one of the largest investment capital firms in Europe with over 15 years of encounter involving more than 40 purchases. The enterprise capitalist helped the managing to acquire additional skills and organization contacts as needed while even now giving a superb liberty to the management to pursue their business technique. In return for their particular trust, buyers were paid with a total average development rate of 31% in revenues and 50% in profits coming from 1999 to 2002. In 2002, KTM generated 80% of its revenues from off road motor bikes and related accessories. Geographically, 60% of its earnings came from The european union (mostly Austria & Germany). The remainder originated from the USA (30%). Due to its technique focus alter, the company distributes 80% of its motorbikes via its very own sales subsidiaries and 20% through basic importers (mostly located in South usa, Africa, Quotes & little Asian countries). KTM can be planning a geographic expansion in new EU countries in addition to the USA. Likewise, the company would like to expand 4-seasons catalog by offering on the road motorcycles, ATV and other items. While the progress perspectives to get Europe will be low, the USA, South America and Asia location are believed to get promising. KTM had a solid dealer contact system that enabled the business to respond quickly to market styles, to properly predict product sales and to decrease inventory costs. Its economic performance is indeed based on these kinds of key factors: a strong supplier relationship, an increased inventory management and the justification of their administrative costs. Still, you’re able to send debt to equity proportion is large compared to rivals. KnГјnz forecasted EBIT to grow among 6% - 8% for the next 3 years before leveling off to around 4% – 6% for the subsequent 2 years. This individual wondered how the financial marketplaces would affect KTM's economical outlook.

The motorcycle market

In 2003, the bike industry was a great sector to invest in as it was expected to knowledge a five. 3% progress per annum from 2003 to 2007. This growth was mainly because motorcycle was likely to gain broader approval.

Within this market we recognized two primary types of product – on-road and off-road bike - that address diverse caterogy of clients as in depth below.

Product| Goal Clients Characteristics/Expectations

On-road| * Young cyclists that search for performance, therefore preferring racing-replicas motorcycle * Old bikers that look for a certain way of life and...

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