The Intersection Where Leveraged Buy Outs (LBOs) Meet Sewing Machines

Greetings everybody,

A couple of weeks ago I put out an article that touched on the history of a handful of popular European sewing machine manufacturers:

A theme throughout the article was that a lot of these European companies were sold in the late 1990s-early 2000s and acquired by private equity firms that specialize in leveraged buyout transactions. However, I did not go into much detail on the implication of leveraged buyouts and how they affect the sewing machine manufacturing process.

Fortunately, my father has written an article that helps break down how leveraged buy outs work and why they are conducive for poor quality sewing machines. With nearly 40 years in the sewing machine industry as a technician and business owner, he is an invaluable source of wisdom and knowledge. I always appreciate when he takes time to write an article like this, so that wealth of knowledge can be shared with the broader sewing machine community. I think sewing machine enthusiasts will find it fascinating. I hope you enjoy.

—Cale

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The Intersection Where Leveraged Buy Outs (LBOs) Meet Sewing Machines

Written by Dan Schoenberg

Singer Featherweight vs Singer Heavy Duty

I often get inquiries in my inbox on what I think about a certain sewing machine make and model and why I don't list it in my annual sewing machine review. I have deliberately avoided talking about machines I do not sell and instead focus on sharing why I like certain manufacturers and specific makes and models.

In general, I like sewing machines that demonstrate innovation, use high quality materials, and are engineered for longevity and reliability. It is no coincidence that the sewing machine companies that consistently achieve this very high standard of excellence are very old companies that have never been sold. For example, Bernina, Janome, and Brother are all sewing machine companies that are over 100 years old. Baby Lock, the company that developed the first domestic serger over 55 years ago, is still the gold standard for quality and serger innovation; they, too, have never been sold. Juki, another Japanese sewing machine manufacturer specializing in industrial sewing machines and now domestic machines also is approaching 100 years in existence without ever changing hands. For these companies with a proud heritage, it is still about the sewing machine.

In contrast, there are three iconic sewing machine brands that were the target of Leveraged Buy Outs, or LBOs: Singer, Viking, and Pfaff. In most LBOs, a private equity firm uses almost entirely borrowed money to buy a company with the intent of improving its operations and profit margin in order to resell it quickly; usually between 5-7 years.

In 2004, Kohlberg and Company acquired Singer in a LBO. Singer had long been in decline for various reasons and in my opinion had not produced a high quality machine since the sixties. Two years later, in 2006, Kohlberg acquired VSM Group, which owned both the Viking and Pfaff Brand. All three iconic brands were merged together to create SVP Worldwide— the letters SVP standing for Singer, Viking, Pfaff. In 2018, Kohlberg completed the LBO process when they sold SVP Worldwide to Ares Management, another private equity firm. A few years later, in 2021, Ares Management flipped SVP Worldwide yet again, selling the company to Platinum Equity (another private equity investment firm).

So, why is an LBO bad for the “sewing machine” ?