Cycle Gear Inc. to Buy Revzilla.... Maybe

By Lauren Hirsch

Feb 4 (Reuters) - U.S. motorcycle store chain Cycle Gear Inc. is close to acquiring RevZilla, a website that sells motorcycle apparel, in deal that would create a company valued at between $400 million and $500 million, including debt, a person familiar with the matter said.

A deal is expected to be announced in the coming days, according to the person, who asked not to be identified because the deal is not yet finalized and could still fall apart.

RevZilla and J.W. Childs, the private equity firm that owns Cycle Gear, could not immediately be reached for comment.

The deal will help Benicia, California-based Cycle Gear, which has more than 100 stores in 34 states, expand its Internet footprint. Philadelphia-based RevZilla, which has $100 million in sales, is owned by three young motorcycle enthusiasts who founded the company as twentysomethings in 2007.

RevZilla YouTube's page, which posts product reviews and videos about motorcycles, has more than 60 million views.

J.W. Childs acquired Cycle Gear in January 2015 from private equity firm Harvest Partners. (Reporting by Lauren Hirsch in New York; Editing by Alistair Bell)

akbeemer said:

By Lauren Hirsch

Feb 4 (Reuters) - U.S. motorcycle store chain Cycle Gear Inc. is close to acquiring RevZilla, a website that sells motorcycle apparel, in deal that would create a company valued at between $400 million and $500 million, including debt, a person familiar with the matter said.

A deal is expected to be announced in the coming days, according to the person, who asked not to be identified because the deal is not yet finalized and could still fall apart.

RevZilla and J.W. Childs, the private equity firm that owns Cycle Gear, could not immediately be reached for comment.

The deal will help Benicia, California-based Cycle Gear, which has more than 100 stores in 34 states, expand its Internet footprint. Philadelphia-based RevZilla, which has $100 million in sales, is owned by three young motorcycle enthusiasts who founded the company as twentysomethings in 2007.

RevZilla YouTube's page, which posts product reviews and videos about motorcycles, has more than 60 million views.

J.W. Childs acquired Cycle Gear in January 2015 from private equity firm Harvest Partners. (Reporting by Lauren Hirsch in New York; Editing by Alistair Bell)

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If the news is real, I can only hope the 3 partners get a good price. They've built a darn good web store and tying that to a brick & mortar retail business can only be bad. I like the Common Tread forum.

Great for Tony, but I'd rather see Revzilla buy out Cycle Gear.

I hope RevZilla remains a quality retailer. I buy most of my online purchases from Zilla, Motorcycle Superstore or Twisted Throttle. Prices matter, but customer service seals the deal.

akbeemer said:

I hope RevZilla remains a quality retailer. I buy most of my online purchases from Zilla, Motorcycle Superstore or Twisted Throttle. Prices matter, but customer service seals the deal.

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I totally agree. I'll be surprised if the customer service remains the same.

Hope not...

Most Cycle Gear store seem to be shifting to their house brand, Shift maybe...no pun intended. Rarely visit them anymore as the old feel isn't there for me.
Revzilla does get our business.

Bummer if true. I can only see customer service going down the drain. Too bad because the customer service is what keeps me going back.

I hope not! Revzilla is good people. The only way I like this deal is that Revzilla wins. Frankly, I am totally sick of an economy where the deal is to buy somebody elses work instead of investing in something new. But that is our sick as crap (instead of the real word) economy at work. Don't invest in new jobs and production - just buy something. Crap - but the best our sick crap can come up with.

henzilla said:

Hope not...

Most Cycle Gear store seem to be shifting to their house brand, Shift maybe...no pun intended. Rarely visit them anymore as the old feel isn't there for me.
Revzilla does get our business.

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I think Cycle Gear's house brand is called Bilt. Some Bilt products are OK, some just seem cheap and not worth the money. My helmet is Bilt and it protects my noggin just fine. But, I looked at one of their jackets in store and it already had strands of fibers coming off the seams; points to possible quality control issues in my mind.

As for service, I've had decent service at the Cycle Gear store here in Wichita. The guys behind the counter seem pretty knowledgeable about bikes and are usually happy to share information. The only time I had a problem was when I needed a particular tool last fall. They were sold out and told me it should be in Thursday's delivery. When I came in Friday, they still didn't have it. Two weeks ago I was in the store they still didn't have the tool. Makes one wonder about their inventory system.

PGlaves said:

I hope not! Revzilla is good people. The only way I like this deal is that Revzilla wins. Frankly, I am totally sick of an economy where the deal is to buy somebody elses work instead of investing in something new. But that is our sick as crap (instead of the real word) economy at work. Don't invest in new jobs and production - just buy something. Crap - but the best our sick crap can come up with.

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You won't be able to blame the Revzilla guys for taking the wind-fall, but, I don't believe, you can find many examples where a struggling brick-and-mortar business, especially one owned by a holding company, has absorbed an on-line/mail-order business and been successful.

Bye-Bye Revzilla............I thought you were great.

Sale

Paul, the folks who created Revzilla are just the folks you are talking about. They created a valuable service which hopefully will be maintained. They certainly aren't getting a wind fall as others suggest. They have obviously worked very hard to create Revzilla and its value. They are getting a very good pay day.

elgin mary said:

Paul, the folks who created Revzilla are just the folks you are talking about. They created a valuable service which hopefully will be maintained. They certainly aren't getting a wind fall as others suggest. They have obviously worked very hard to create Revzilla and its value. They are getting a very good pay day.

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Wind-fall ...... Good pay day........ are the same thing. In addition, Paul is correct.

Cycle Gear is desperately seeking a means of satisfying it's owners, a holding company / private equity firm. Instead of creating that capacity and talent in-house, they're purchasing a successful company. So, now, who has a vested interest in what were the Revzilla business practices or policies? Those aspects that impacted the customer?

The new owners? They didn't build any of that. Unless they change it........they haven't done anything for their salaries.

The old owners? They're gone. They've been the boss and they aren't going to take direction from the private equity firm or the Cycle Gear management that couldn't figure out the business in the first place.

The old employees? They'll be there until the new management team brings in their own people. These folks are the real losers. Just like the former MOA staff in MO, ....... "Thanks for your efforts......Good-bye"

henzilla said:

Hope not...

Most Cycle Gear store seem to be shifting to their house brand, Shift maybe...no pun intended. Rarely visit them anymore as the old feel isn't there for me.
Revzilla does get our business.

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I agree.

Most of the 'Built' and 'Shift' lines of CycleGear (been in their stores in Waukesha, WI and Fayetteville, NC) seem cheap and of poor design and potential longevity.

Rev'Zilla on the other hand (Anthony's videos are both a hoot and informative) have supplied me with quality gear for some time.

But if the numbers are astronomical, I can see the trio of founders being very tempted by an offer.

Hoping for the best?!

greenwald said:

I agree.

Most of the 'Built' and 'Shift' lines of CycleGear (been in their stores in Waukesha, WI and Fayetteville, NC) seem cheap and of poor design and potential longevity.

Rev'Zilla on the other hand (Anthony's videos are both a hoot and informative) have supplied me with quality gear for some time.

But if the numbers are astronomical, I can see the trio of founders being very tempted by an offer.

Hoping for the best?!

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There's no shame on the trio of founders if they take the offer. Likely, it's their most direct path to profiting from the venture.

However, for the motorcycle industry, I fear that loosing an urban setting retailer who's strongly advocated expansion of the youth market, which is mostly urban............is not a good thing.

36654 said:

Wind-fall ...... Good pay day........ are the same thing.

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l

I believe Mary was using wind-fall to mean something unearned while a pay-day is the result of hard work. That is my sense of what she meant.

akbeemer said:

l

I believe Mary was using wind-fall to mean something unearned while a pay-day is the result of hard work. That is my sense of what she meant.

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I got that. But, I also find it an arbitrary distinction. A good payday would be taxed at your income level, while a wind-fall could be a capital gain taxed at a lower rate. However, if the person getting the wind-fall isn't you, then it should be taxed as income, like hitting the PowerBall. It's just a matter of perspective....

Cycle gear serves a segment of the riding market. Not everyone who rides has endless budgets for top of line gear so for providing a service to the market segment I applaud them.

I also use cycle gear for tires, they have good prices, and for the tire changes. Far better than the dealer prices so that's appreciated as well.

Revzilla is a great online store so hopefully they're being properly leveraged in this deal. It would be disappointing to see them reduced to something less than what they currently are.

I haven't been able to get any facts yet myself, but the announcement is really vague. What I am hoping is that this isn't a straight sell-out, but strategic. What is important is who will run the operation. If the current Revzilla braintrust remains in charge, this could be good. Something similar to the way Buffet works: I own the company but you run this. If the Smart-Money behind this is really smart they let Rev Z run the show, using the Cycle Gear brick and mortar as an Rev Z extention. . time will tell .

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36654 said:

I like the Common Tread forum.

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If you squint your eyes, Common Tread illustrates what the MOA could be... community interaction across on-line and the real-world spaces with relevant commerce options readily available.

Anthony Bucci knows wtf he is doing.

Ian

Good luck to the Revzilla founders on this business deal. They come out great. However... I have seen a number of national and international companies get sucked up by investment bankers. The results have been mixed at best. The problem is that investment bankers look totally at top and bottom line revenue production, and do not necessarily understand the market forces in the companies they have acquired. One such organization I am familiar with was purchased from the founder family and there was an immediate change in focus of servicing the customers on the front lines. Lots of new required purchases to the dealers and no real basis for doing so. After awhile the first investment group figured out that there was no real money in the deal due to market saturation and economics. They sold to a second investment group, the results of which are still being determined.

I like Cycle Gear for certain products they carry, but their focus in more on off-road stuff in our store. They also cut the floor space considerably a couple of years ago to save overhead expense. This resulted in loss of lots of retail display space with the required reduction in stock actually on had. If they stock some Revzilla-quality product it will help, but if remains to be seen if this works.

I, sadly, fear that the Revzilla we know and love will disappear into the morass of MBA's and bean counters who have no idea how the motorcycle market works.