Reverb is a leading online marketplace for new, used and vintage musical instruments
Etsy, Inc., the global marketplace for unique and creative goods, has signed a definitive agreement to acquire Reverb Holdings, Inc., a privately held marketplace for new, used and vintage music gear for $275 million in cash, subject to certain adjustments with respect to cash, debt, working capital, transaction expenses and the value of equity awards granted in connection with the transaction. Reverb, which will operate as a standalone business when the deal closes, was founded in Chicago in 2013 on the principle that buying musical instruments should be easy and affordable. Reverb’s sellers are generally individuals, brick and mortar retailers, dealers of all sizes, and high-profile artists.
The music gear industry is unique in that items are often bought and resold, numerous times. Traditionally, musicians only had access to instruments they could find locally or on resale websites that weren’t tailored to the music industry. Similarly, musical instrument retailers were often limited to regional customers and musicians had fewer options for reselling used gear. Reverb has created a destination for the global music community to come together online. This gives sellers a global audience and musicians around the world access to more inventory and rare, highly-coveted items. The result is a liquid marketplace that fosters a loyal and passionate user base. In fact, many Reverb users are both buyers and sellers.
“Vibrant two-sided marketplaces are lightning in a bottle – there are only a handful of them operating at scale – and Reverb is one,” comments Josh Silverman, Etsy, Inc. CEO. “This transaction is a great strategic fit that firmly aligns with our mission of keeping commerce human. Reverb is the ‘Etsy’ of musical instruments, with significant competitive advantages, and we see tremendous value and untapped potential in the business.”
“There are a number of similarities between the levers of growth for Etsy and Reverb,” continues Silverman, “such as improving search and discovery, making selling and buying easier, and building a global brand and user community. We have been successfully implementing these types of initiatives at Etsy for two years now, and are confident that we can similarly impact Reverb’s business. We look forward to welcoming Reverb’s talented employees to the Etsy family as we work to better serve our buyers and sellers and drive value for our stakeholders.”
“In a short amount of time, we’ve built a community that musicians from all walks of life turn to for income to support their families, inspiration to fuel their passions, instruments to create new music, and so much more,” Reverb CEO and founder David Kalt states. “We’re excited to continue growing our marketplace, team, and community as part of Etsy. We’ve always found inspiration in Etsy. In fact, the company gave me the confidence to launch Reverb when I saw the need for a musician’s marketplace in 2013. We’re excited to align ourselves with a marketplace that has been supporting artists, makers, and creative entrepreneurs for nearly 15 years. Together, we’ll continue to create a destination online where the music industry connects over the perfect piece of gear.” Kalt has decided this is the right time for him to make a transition, and will continue to serve as CEO until Etsy identifies a new leader of the business. He will remain closely involved to provide leadership and support following the closing.
Reverb will enable Etsy to expand into a new vertical, with a company that has a similar strategy and business model. The company has built a strong brand in a large, fragmented market, with healthy growth dynamics. The marketplace offers its sellers on-site product promotion and has a strong content-driven marketing strategy; it is in the early stages of leveraging its platform for additional revenue growth. Reverb’s seller base spans many countries, with key markets including some of the same ones as Etsy, such as the U.S., Canada, UK, France, Germany and Australia. Leveraging Etsy’s expertise, Etsy believes that Reverb will be better positioned to capture addressable market opportunities and drive repeat visits.
“As we have said, our M&A strategy looks to put our capital to work in an opportunistic way – finding great businesses at the right value – and we believe Reverb is just that,” says Etsy CFO Rachel Glaser. “Reverb shares our mission, has a nearly identical business model, a strong brand in a large, fragmented market, and healthy growth dynamics. We plan to run Reverb as a standalone business, sharing knowledge and best practices across key marketplace growth areas such as marketing, seller services, and international.”
The transaction is currently expected to close in late third quarter or early fourth quarter of 2019, subject to Hart-Scott-Rodino review and other customary closing conditions. Etsy plans to provide information on any impact to the previously provided financial guidance following the completion of the transaction.
Author: Buddy Iahn
Buddy Iahn founded The Music Universe when he decided to juxtapose his love of web design and music. As a lifelong drummer, he decided to take a hiatus from playing music to report it. The website began as a fun project in 2013 to one of the top independent news sites.