The Yacht Law Podcast
The Yacht Law Podcast
How Consolidation Is Reshaping the Yachting World
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Are you ready to navigate the intricate waters of the yachting industry's recent merger and acquisition wave? We dissect the angles of this fascinating development, starting with the superyacht industry's consolidation and its implications. We discuss the big deals rocking the boat, like MarineMax's acquisition of IGY Marinas, Northrop & Johnson, and Frasier Yachts, as well as Safe Harbor's purchase of Savannah Yacht Center. We also unpack the exciting, yet often uneasy, process of these acquisitions, particularly when iconic companies get swallowed up.
Join renowned maritime attorney Michael Moore and journalist Diane M. Byrne as they share invaluable insight into previous mergers and acquisitions in yachting--ones likely overlooked in today's climate. We also tap into the role of 'blank check' companies, discuss the potential perks of merging Fraser and Northrop & Johnson with MarineMax, and contemplate the customer's perspective and the captain's role in decision-making. This episode is a must for anyone eager to understand the ebbs and flows of the thriving yacht industry.
Have a yacht law question? Email it to info@megayachtnews.com or michael@moore-and-co.com for your chance to have it answered on our podcast. All requests for confidentiality and/or anonymity are respected.
Hiring a lawyer is a big decision. Visit Moore & Company for the legal team's qualifications and experience. And, to learn the latest about superyacht launches, shipyards, designs, and destinations, visit Megayacht News.
Welcome everyone. Michael, good to see you again.
Speaker 2:Thank you, diane, good to be here.
Speaker 1:You know, since you are full-time in Florida, you, I say, are pretty lucky because the cruising season for you never ends. But for people like me who are splitting their time between Florida and the Northeast, i was thinking a lot about this week because we have to take whatever days we get. The weather has been horrific lately. It's been a really terrible start to the summer. So the other day I was pretty excited because the weather broke just in time for me to take advantage, sort of of one of those days in New York City. The weather wasn't entirely cooperative so we didn't really get to go cruising, but at the very least I was on a yacht, which made me quite happy. It was a 38-meter enterprise from Baleado, and Baleado and Burgess had actually invited a bunch of us journalists to come see the boat, since she's starting to charter.
Speaker 1:So I was thinking a lot about cruising and these opportunities that we get in our industry.
Speaker 1:And it also made me think about our topic today because, coincidentally, the marina where enterprise was earlier this week is North Cove. North Cove marina, which is operated by IGY, and IGY marinas is one of a few yachting companies that have undergone an acquisition in recent years, so it was an interesting tie-in, i thought, to our discussion today. These mergers and acquisitions certainly have gotten a lot of attention within yachting and attention outside of yachting because of some of the companies that are involved. So I thought it would be a good opportunity for us to talk about what these acquisitions and the resulting consolidation means and doesn't mean, because there are certainly a lot of questions and there's some concern on the part of some people, which I don't know is entirely warranted. I think there are also actually some very good opportunities, but from your experience in the industry, it might be very interesting to hear your perspective and some advice maybe that people can use to weigh the pros and cons when it comes to dealing with these companies that are being acquired.
Speaker 2:Right. I think that it's something, that it's amazing how the yacht world I don't believe it's like anything in the world other than the nature of the business. Now you mentioned, for example, two locations, north South Florida, the Northeast being enjoying the wonderful world of yachting, getting out on the water. And so what I think about in terms of sort of the entire, looking at the entire, i mean obviously for a law firm the phone rings and you deal with it, and but you can't escape that it just seems like yesterday that IGY was talking about 13 countries and 23 marinas And they were very proud of that fact And they had wonderful locations And of course they had it seemed, at least in my experience wonderful people running those locations. And so you know, life was good for IGY And I've had the pleasure of representing them on certain certain some of their locations is usually by by location.
Speaker 2:And then suddenly you know, you read that they've been acquired by Marine Max for the princely sum of $480 million. So it's kind of like an unsettling thing. You know, your world is sort of unsettled And you really start to wonder what that means. They, you know these, these mergers, these acquisitions, they come in so many forms. We hear a number like 480 million year year costs. You think you know in what form was that money paid. I can tell you that the vast majority of these things are paid in stock And the stock is driven by someone at the someone at the top who has access to the capital markets, and I don't want to get too deep into you know how and you know who benefits in the sense. If you went online and looked up the publicly traded companies that own Marine Max, or the publicly traded companies that own Safe Harbor or some of the other names that have been in the industry in terms of mergers and acquisitions, you know you can draw your own conclusions as to the stock value, as to how you convert your 480 million to stock and vice versa. Are you even allowed to sell, for example, the wonderful pay-for-pay out that you received for a period of years?
Speaker 2:And then, of course, if it, if it doesn't go but I mean, it's something that you think about when a great name like you know it's these are not 200 year old companies, but in the case of Northamon Johnson, for example, the brokerage firm that was acquired by Marine Max, it wasn't, it wasn't that long ago that that happened. I think it's 2020. And you know how does? how does Marine Max acquire a brokerage house and for what purpose? particularly when the next thing you read is that they've also acquired Frasiers another great name And the question is who benefits? I think that you know we. I think the answer is we shall see. I think it was a show in Laos, who say this too early to tell. When asked about the effect of something that had happened in China 100 years ago, he said it's too early to tell These.
Speaker 1:You know all of these acquisitions, the ones you just mentioned. The acquisition of I do why Marine is the acquisition of Northamon Johnson, frasier yachts, all coincidentally or perhaps not coincidentally by Marine Max. Then you look at safe harbor, having acquired Savannah yacht center just a few months ago. In over the past year or two. Prior it was Newport shipyard, lord of Elm Marine Center in Rybevich. Each one of those companies brokerage house, marina manager and operator, marina shipyard, etc. Each one was a really good business, really good at doing exactly what they do. So from a business standpoint, it's very easy to see why each one of them was such an attractive acquisition prospect. And from from a standpoint of a business owner myself, i get it also, having been through the acquisition process as an employee.
Speaker 1:I worked for Power and Motor Yacht magazine for 16 years And in those 16 years we were sold three times, which is that can certainly sound unnerving, and the first time it happened I was very young in my career And I thought, oh my God, what does this mean? But at the end of the day It was. we were part of a package of magazines. We were extremely profitable. As a matter of fact, we were the most profitable magazine out of the dozens that were part of the package. The parent company that owned us at the time had created a consumer division and decided they didn't want to be in consumer media anymore. They wanted to stick with their business to business titles. That's why they sold us. They sold us for a very tidy profit to another company. That company in turn sold us a few years later to another one, and so on and so on. That's how it went.
Speaker 1:From that standpoint, i also understand why each one of these properties was very attractive. What surprised me, though, in our industry, was how it seemed that at least the impression that I got from some people in the industry and apparently some crew and some owners also, were concerned. They thought okay, that's it, this wonderful family-run shipyard is never going to be the same. This wonderful group of marinas is never going to be the same. All I could think was how can you make that assumption? It's really like you were just saying the quote from Chairman Mao. You don't know. Really, it's a wait and see. You can't automatically say, oh, my god, check it a little, the sky is falling. Neither, frankly, can you say, oh, everything's going to be great, because look how much money they have to invest. You just don't know. I found it very interesting that there was such a negative, almost knee-jerk reaction right away. I wonder if that has to do with the human resistance to change, if it's just that fear of change that was driving people.
Speaker 2:What do you think? No, i think it's one of these things that the change is. I mean, i've been through this kind of phase when everyone seems to get the same idea at the same time. Then you have this, as you say, a knee-jerk reaction to change itself. I think that I will say this, as a very wise man once said to me that when a law firm was in the paper for requiring another law firm which seems to be the thing in what's called now big law he said, michael, do you know what you get when you combine eight mediocre law firms, i said, into one law firm? he says yeah, i said what He says a monumentally mediocre law firm.
Speaker 2:I thought that was just an interesting way for this at that time older gentleman to say to me I wouldn't put too much stock in it. I think that the problem and the discussion I think maybe this is a conversation that sort of is a word to the industry. It's not just the American side of things that we've talked about, with safe harbor just being on an absolute tear. I recall I think I'm correct about this that safe harbor is what is called a blank check company. That is actually a company that has access to the capital markets but when it starts it has no real reason for being. It's just a blank check. And so, as a result, you end up with do they really have a game plan for where they're going? Well, i think we can all agree that safe harbor seems to have locked into a space that is bowyards, the ones you mentioned. very fine bowyards Rybevich, lotto Marine Center, newport Shipyard, then Savannah. So those are the four, and I'm sure there are others in their network, not unlike, by the way, monaco Marine, which has nine bowyards on the Mediterranean. And here again, i believe Monaco Marine is actually a company that comes out of California. Yeah, monaco at all. It's just some people in California that had an idea. So I think that you know, and so then you get into the benefit. I mean, who benefits? What is the benefit of combining? I'm sure there's management at the top trying their best to decide how do you deal with the strong brand of Frazier versus the strong brand of Northup and Johnson and somehow combine that with a strong brand of Marine Max? You know at one time had 62 stores, which I thought was remarkable, and that was before it started this move into some other areas.
Speaker 2:I do recall Marine Max trying to get into the large yacht market and frankly, my impression was that wasn't really going so well for them. They were still kind of in that market, i think the principle part of yachting, if you call yachting 50-foot boats. they were strong in the middle, what I call the middle market, but they really had not gotten into the above, what I would call a true mega yacht. So I think we're in that moment when it really is too early to tell. The global market is somewhere above 50 feet, but the market that we tend to focus on, people like you and me, is the larger mega yachts. Things are also changing to sailing, i think that the people on the ground, however, they really don't seem to be too worried about it. It is just what it is.
Speaker 2:I read an article recently it was back from about a year ago, maybe a year and a half ago six extremely well-known people in our space You would know all of them. What was there? Things about the future of yachting. It was for them it was all about 3D printing, young owners getting into the market, the move to multi-hulls for a smoother ride, so to speak, safety and security. the cost of integrating glass into the designs of yachts, which I think maybe is viewed as a little bit more environmentally sensitive, perhaps. And ultimately the remote exploration, the fact that yachts can go now further and further. But none of that had to do with any concerns about the mergers on acquisition tear in the yacht world. It was all about just things that affected the market in terms of young ownership, or how do you build boats? better, multi-hull for a better ride, better stability, safety, security. So it's an interesting thing because we will be affected by it.
Speaker 2:I mean, i can tell you the marketplace doesn't really understand it. I say that because I'm dealing with a very high net worth fellow who has a wonderful yacht 200 feet and he's at one of the three. well, he's been in, this will be his third yard and he's very unhappy, a very unhappy yacht owner right now. But when I sort of talked to him about it, he talked about Monaco Marine and I said, getting back to that for a moment he did not understand that the three yards that he had been in were basically each one were part of a nine yard network. He had some idea that Monaco Marine was who he was holding to account and he's going to be fine. I'm not sure if it's anything new in the yacht world, but it had just irrelevant to his needs that they were. Monaco Marine was this network of boat yards with varying ownership structure. He was more interested in the service. How are they doing on project management, the logistics, the cost of services, the basics?
Speaker 1:Right, you know that brings up a good point and it certainly ties to my own experience through these mergers and acquisitions too. It doesn't matter that it's media, i think at the end of the day, company A acquiring Company B is largely the same when you look at the big picture, whether it's Marina, a magazine, a chain of grocery stores.
Speaker 1:What have you? the acquiring company acquires the other asset because they see something that they're doing really, really well and they believe it's complimentary to the other business holdings. Or they see something that they're missing a golden opportunity on, and that would be more so with a distressed company. That wouldn't be a company like the ones that we're talking about. That would be more of a, again in my experience, something that's on the brink of bankruptcy or maybe had already filed bankruptcy. The acquiring company says man, they just missed it completely.
Speaker 1:We could totally fix that and boy, we can turn this thing profitable in no time. But when you're talking about companies that do certain things really well, or they do things acceptably by the new ownership's view, by and large they don't interfere. They let you continue to do what you do. That certainly happened with the magazine. Management came around and met with every single one of the magazine's editors and publishers and said in the case of Power and Motor, yet you guys are making money, you're making a lot of money, you're very efficient in your spending. Of course they wanted to see certain costs come down, as you can always understand a parent company wanting to cut certain costs. But when they were given a reasonable explanation as to why our travel and entertainment budget was so big, the expenditures were so large, they said okay, we get it. You need to travel to see the boats. You can't just be keyboard warriors, so to speak, and continue onward.
Speaker 1:In the case of all of these different companies, the marinas and the shipyards that have been bought, if they were doing what they were doing all along really really well, or even adequately in the view of the new owners, they're not going to be changing anything anytime soon.
Speaker 1:The only thing that they would start to change might be behind the scenes things in terms of contracts, streamlining some of those, maybe streamlining some of the other day-to-day paperwork processes, but when it comes to the customer experience, that really would not change until further down the road. If something is broken, so to speak, a smart company is not going to mess with success. If they do start messing with success, then that word, i think, would circulate far earlier than anybody would even see. Everybody would just know that from past experience or other people's past experience, and they'd be running for the hills and say, ooh, i don't want to do this company, i don't think we're dealing with that in any of these situations. Not that, again, i am not an expert at it, but I've not heard anything that would make you say, ooh, maybe this isn't such a great marina to be at, maybe this isn't such a great shipyard to be at, maybe this isn't such a great brokerage company to deal with. It doesn't seem like their true day-to-day operations have changed.
Speaker 2:Well, i mean to your point. I think that historically and I think that they might be amused at our musings and observations as two people on the ground in the art world but go back to Feredi Group, one of the first situations, you know, they kind of went through different iterations. They were then acquired by some Chinese interest and I think I read recently they're going into a different situation now in a different marketplace. But all of these things, you know, none of that really was of interest to me. This legendary name that is visually, i guess, with an audibly Italian, suddenly is on by the Chinese. Nothing really seemed to change. But if you thought about the vessels that were in that group, the builders in that group, like Bertram, like Pershing Ariba, i don't know that that was really the necessarily good for those brands. Bertram has kind of diminished, i think. I think I think it's fair to say I don't know that, i don't know of any new, bertram said, at any time. Recently I went by their, by one of their facilities, and there was only one boat inside there. So it's not, it's not something that you can immediately point your finger to. You really have to ask yourself do you see what's going on in terms of some benefit to the company itself that actually endures to the benefit of the customer.
Speaker 2:Now, one group that I've been kind of keeping my eye on, which is a very powerful group that seems to be producing astonishingly wonderful yachts, that it does not seem to be welcomed into the global, shall we say, family of yacht builders is the Italian Sea Group. I'm just saying because I deal with customers. I deal with clients, i deal with people that actually buy, that have the money and actually buy the things, and we had a client recently buy a yacht and see their group is. The one that I love is the is Prini Nabi. They build fantastic style boats. Their new boats are stunningly, visually gorgeous. Now have I been on one and, you know, gone below and tested it to the maximum extent? The answer is no, i don't have. I haven't been invited. That's number one. But I've got a few clients now who are basically on my recommendation or checking out Prini Nabi. They own, they have legendary yachts with their name. They have new management, they have new leadership. But they also have something that is Amazing, like the admiral line. They have the Tecno Mar vessels. They are beautiful and they seem to be exceptionally well engineered.
Speaker 2:I had a client recently spend a ton of money at the Italian Sea Group for a large megaiot and he basically compared it to the northern European yards and said I can buy it for half the price Before I would have to pay if I went to one of the northern European yards and the ones in the Netherlands are in Germany and I went wow, that's quite an amazing thing to say. He says no, no, i've looked, i've shopped, i have people that do this for me, engineers. He basically bought a yacht from the Italian Sea Group and he loves them. It was an admiral, which I don't really know much about that product. But he says no, it was.
Speaker 2:The entire thing was having to do with the quality of the product. I know that Pikiyati has been around forever. They brought it back, since it's been around for several, i think over a couple hundred years, and they brought that brand back. I don't know that. I've seen a Pikiyati. I don't know about the NCAA refit, i think for any Nabi, just in terms of a family of wonderful yachts, the people they have in charge there, young man named Vittoria Blangini, is just terrific. I mean, he's very responsive and I know that my client has been totally happy dealing with him.
Speaker 2:So my point is that maybe there isn't one answer and there isn't just one thing to be worried about, but the thing that the Italian Sea Group seems to be doing is combining their technologies in a surprising sort of amalgamation of new management know-how, technology emphasis with these amazing Italian designs. Because the Italians, who knows? is it DNA, is it historical? I don't know. Is it Michelangelo, is it Da Vinci? I don't know, but these new designs are just shockingly beautiful.
Speaker 2:In my mind, to my eyes I'm just one guy down in Miami, but I don't know. On the one hand, you have the sales group, that's the Marine Maxes of the world. They're trying to sell things like Frazier's and Northman Johnson. They're selling. But on the other hand, you also have this amazing thing in the building world, and some things have not done so well Nova Screw comes to mind when they've been through some kind of rough patches. The last time I checked, it seemed to me like they were gobbling up things and growing and acquiring and spreading their wings. By the way, the name of the yacht that I couldn't think of the name of it was Kinshaw.
Speaker 1:Oh right.
Speaker 2:Fantastic yacht, by any measure. in my view, styling is stunning. It turns your head. You look at it and go wow. On the right side, it's even now, it's even more wow. Then when you go into those groups, you go well, they're doing something right.
Speaker 1:I don't know.
Speaker 2:You got the building side, you got the selling side, you got the management side, and But I think there will be Inevitably. I think what it comes down to the the customer is the one that's going to speak loudest, and I think the captains Are the ones that actually are the decision-makers. To a great extent, the trusted captain's role in the society We are, this international family that we're a part of, is a huge component of What we're dealing with here. And you know I get a lot, i get an earful. I get an earful that some captains traveling north, how he makes the decision of where to go, you know what protocol does he go into? It's not about, it's not necessarily about a brand name. You know it's right services and so forth right, it really.
Speaker 1:I think all this really comes down to understanding two things. It's understanding Not just what the, the new ownership group, can bring to the table, which goes beyond economic stability or economic growth.
Speaker 1:It's the, the mindset, how they're going to View the company, how they're going to view their other Holdings in conjunction with it, but it's it's really understanding what their ultimate goal is, what the end game is for a And this is pure conjecture, i want to make it make that clear But for a sales company the likes of a marine max, you could easily see Them saying, well, okay, we have all these customers in the pipeline, they've got 40 footers, i've got 50 footers, 60 footers. Clearly, having something like Northman, johnson and Fraser means they've got this great pipeline to continue growing those customers and giving them more Services. And they were for holding on to that customer for many, many more years.
Speaker 2:Mm-hmm.
Speaker 1:That's, that's the ultimate end game for any company, right? So it's really understanding what the thought process is and then saying, as the consumer, sitting back, whether they're the captain or they're the captain with the owners, okay, well, does that Suit us? does that mean it's going to impact us Either positively or negatively, and then make your decisions from there.
Speaker 2:One of the things that I met and might be helpful in terms of the conversation of Maybe the theme is there is no ready answers. You need to take each situation with a grain of salt. I was dealing with a fellow yesterday And the idea was The he needed. He needs work done, substantial work done, and how do you select the yard? and Basically, i noticed that every reference was to you know he wants to be near the work, so he wants to use us a yard in Florida, south of, shall we say, vera Beach, which would be South Florida. He said I want to be near the work, i don't want to send it off to some additional location. I had to spend hours in a plane to get there from time to time and He never once talked about any branding. He just simply referred to the yard. Says Merrill Stevens or LMC He's still using that word or Ryba which. Or even Rossioli came up. So that's, that's on the ground. So it reminded me of a, it reminded me of a lawsuit that we had And it's it's a maritime related thing and it's kind of an acquisition related thing, because This hedge fund and that's what you kind of have, the top of all of these mergers and acquisitions There's a capital access to capital markets component.
Speaker 2:And They had acquired a cruise line, a small cruise line, and They wanted to acquire these two small cruise ships. They were owned by these Greek nationals, two gentlemen. They were partners And they they concluded, based on numbers, numbers analysis, that if they acquired these two ships you like acquiring a business They did it entirely on the numbers. They acquired the two ships from these two Greek Nationals that were the owners of the two ships and Then, after they acquired them, they discovered they weren't very happy with their acquisition And they wanted to blame somebody for their bad purchase and they tried to blame An entity that's in the outworld. It's very, very significant in the outworld in terms of management. They had hired this group to be the managers And so we were hired to defend the yacht management group. And The first, the thing that I could not get over And you kind of wonder when you look at what's happening is that there were no maritime documents in the deal.
Speaker 2:They had acquired these two ships based on balance sheets and numbers, almost entirely. What would become our client? there was no. There were no surveys, the classification documents had not been produced, had not been analyzed, the normal due diligence that we all know in terms of sea trials had not occurred.
Speaker 2:I thought it was some kind of mistake. When I first got the file I said there's nothing in this that relates to the maritime world. They said well, if we did it all on numbers? or they did it all on numbers. I said did you offer to dry dock the two ships? Yes, what did they say? They didn't want to incur the expense. I went oh, okay, well, there's your trouble.
Speaker 2:The point is that the maritime world collided with a different world. It's a capital world, a market world, a money world. It was a disastrous thing that they lost just tons and tons and tons of money. Their stock went down. I'm not even sure what had ended up, because we won our case and the judge issued a fantastic opinion. It went on for days a 92 page opinion, but basically zipped the people that were complaining. Our client prevailed. We were happy to say So. Anyway, that may be. The lesson is kind of stay in your lane, consult with people that actually are in the world that you're in. Continue, don't be too quick to criticize. Do it old school. Do your due diligence By the fact that you have new groups coming out. On the one hand you may say, well, that's just a myogamation into some group You see the earlier reference, the Italian sea group But maybe you should check out their products because maybe they are, maybe they do have an answer.
Speaker 2:Maybe, they do have a reason that they're going to make Admiral or Technomar a bigger brand in the yacht world And while it goes through that process of and maybe bringing back the Coyote, they're going to be value there. They're going to be trying harder and they are not resting on their laurels But, because it's a positive thing, they've got something going and I don't really know what, how they're doing it per se, but it's. I know the products that I've in. The feedback I've gotten from clients has been very, very positive And that's what counts. So, and all these other groups I know they still have their same brands, they haven't changed their fast flags and they're all wonderful people And we know them in the industry and so we'll see where that goes into the course. But anyway, those are my musings, diane.
Speaker 1:Now, fair enough. Fair enough, i agree, it's definitely. You know, you, you, you dot the I's and cross the T's, as my dad always says. You know, you look at it from a. You try to take emotion out of it. Of course, you look at it from the reasonable. Reasonable standpoint, you analyze what's been going on and and make a more educated decision versus the emotional decision. Absolutely Well thought provoking, as always. Michael, thanks for your time today.
Speaker 2:Wonderful discussion, free ranging. Hopefully we've solved some of the world's critical questions Until next time.
Speaker 1:Absolutely. Thanks everybody for listening. If you have a yacht law question that you would like us to address on an upcoming episode of the yacht law podcast, you can contact Michael or me. Whether you are a yacht owner, a crew member, a representative in the industry or even someone seeking to learn more about the world of yachting, we are here to help you make better, educated decisions, while we can also keep you anonymous. You don't need to be. our contact information is in the show notes in each of our episodes, including this one. Until next time, i'm Diane Byrne. Michael, why don't you sign off?
Speaker 2:Thank you very much, diane. It was a pleasure, as always, and great to look forward to our discussions and until next time, have a good day.
Speaker 1:Thanks everybody.
