Focusrite just bought ADAM [Analysis]

Focusrite went public in 2014, but this week brings its first major acquisition – and it’s a big deal. Monitor maker ADAM from Berlin joins the UK’s Focusrite / Novation / Ampify.

Publicly traded companies and fast growing business empires have a bit of a challenge in the music tech business – music creation is still specialized and places a high standard on quality. So ADAM is at least encouraging as a choice; the boutique maker is highly respected and many studio swear by their monitors.

The ongoing question here is really growth, but of course revenue growth isn’t necessarily limited to downmarket tools with thin margins. ADAM’s strength is building an upmarket, boutique product for music makers. And while the studio in the traditional sense has been in decline, “studio” as in independent producers has potential. Just as Eurorack and boutique synths have proven in the electronic arena, that growing population does have a portion of the market who will pay a premium for perceived quality – just as every market has luxury.

That may seem obvious, but I’ve been surprised that so many conversations about growth in our industry are focused at the low end or beginners. The problem with that commodity end is that competition gets fierce. I find it especially strange, because by contrast, you wouldn’t expect the automotive industry to focus exclusively on cheap cars and first-time buyers. Auto is perfectly comfortable describing engines as things only engineers understand, and marketing that specialization. And they make products for specific, high-end customers (think Formula One racing). And that in turn drives interest across the market, because it strengthens the brand (think Mercedes-Benz Group). But I digress.

Maybe the greater ambition in this acquisition is the talk of the two companies working together. I think it’s fair to be skeptical any time there’s talk of that in acquisitions – the reality is often far tougher. It’s unclear for now what Focusrite Group imagine that collaboration to look like, on what products, or if they’ll be able to deliver. But here’s Focusrite’s CEO Tim Carroll on that topic:

“ADAM Audio is undeniably a leader in the field of electroacoustics. The A7Xs and S3s have become standards in recording spaces across the globe. Even so, I know the team have no interest in resting on their laurels. We need to ensure they receive all the support they require to continue raising the sonic bar. That our two companies are so aligned from a cultural perspective reassures me that, as we increasingly work together, great things will happen. With so much expertise between us in acoustics, sound reproduction, DSP, and control, the opportunities are abundant to refine recording and production workflows together.”

For the time being, ADAM Audio stay in Berlin and keep Christian Hellinger in charge. The 20 year-old company are known for their A7X and S3, and now cover a range of potential markets with the T, AX, and S Series.

I’d actually love to see the kind of collaboration described above – and I’m sure the Focusrite Group engineers would love a trip to Berlin. (Come visit, please!) But while it’s not emphasized in the press release, I imagine the immediate benefit to ADAM will be Focusrite’s international marketing operation, which looks increasingly global with LA and Hong Kong alongside the UK. ADAM Audio already spans the Asian manufacturing world (Dongguan), Berlin’s ongoing dominance in engineering, and then the ever-lucrative US market – Nashville.

And oh yeah – Focusrite is traded on the AIM market, London Stock Exchange. So I imagine some reader of this site just had your stock go up. (No disclosure needed here for me; I would make that statement if I did.)

Source: Cdm.link

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