Audio Research Financial Troubles

@ghdprentice

Audio Research’s problems are long over. Nothing to do with the viability of the business, but of a highly leveraged buy out by a great guy with the best intentions and a change in the interest rates.

Respectfully submitted, while I am hopeful that ARC will flourish under its new owner, I am wondering why you think their problems were due to the original financial leveraging of the company.  I see it as the opposite, as a low amount of debt.  Perhaps a balloon payment falling due that could not be refinanced? 

From reading online, at the time of receivership ARC had secured bank financing of $1.6M.  Even assuming a sky-high interest rate of 20% that is only $320,000 debt service a year.  I realize there was also $1M of unsecured debt, but I would think that was the result of operational problems, not from the original purchase.

All things being equal, I would think this should be easily met for a company whose products sell for between $6,000 to $85,000 per unit.

I'm a long-time happy ARC customer (going back to the D76A era) but I am not at all convinced that ARC's troubles are over. As far as I can tell, it still has an enormous repair backlog. The "store" link on its website has been dead for years and its product line has been steadily shrinking (no Ref DAC, no CD player). Its only "new" product introduction is an amplifier that was to have been available a year ago and it isn't clear that the company has any in-house talent to develop anything else.

I wish ARC the best. I'm a nut-job, so I'm actually considering buying a new Ref 6SE, in part because I believe it will be serviceable regardless of ARC's future. I think ARC is doing its best to overcome its issues and that only time will tell whether it succeeds.

Wondering??

It's not only ARC, but everything pretty much going South FAST except I guess war machines, weapons and ammo. 

@czarivey You nailed it.  Luxury items are a leading indicator.  I wonder how many people cut back on their Star Bucks purchases or is it what the hell do I care this is my treat to myself.

@cleeds You nailed it as well with "so I'm actually considering buying a new Ref 6SE, in part because I believe it will be serviceable regardless of ARC's future".

And yes I have a bunch of ARC gear, the latest of which is a REF6 earlier this year bought used. 

Regards,

barts

One thing that struck me while reading the receivership documents was how little ARC really is.  I seriously doubt it ever really made net income after salaries. Bill Johnson didn’t get rich and the last 3 owners didn’t either. 
 

I’m reminded of the old axiom: “ Sell To the classes eat with the masses, sell

to the masses eat with the classes”

I think owning ARC is a trophy hunt- or a labor of love.  If you want to make real money get elected to congress.