SIDEBAR

The last bastion of Capt. Cousteau's legacy has been thrown to the sharks

The last bastion of Capt. Cousteau's legacy has been thrown to the sharks
I can just see Cousteau the father of diving turning in the grave. After the disastrous management of the Calypso by the late captain's last wife, now the last bastion of Cousteau's legacy Aqualung has been thrown to the sharks, but these sharks are not our common aquatic types but rather the ones roaming Wall Street.

"In 1946 Air Liquide founded La Spirotechnique, its own division destined to conceive and mass-produce regulators and other diving equipment. Also in 1946 La Spirotechnique launched the CG45, the first modern regulator to be commercialized. The year 1946 represents thus the beginning of the popularization of scuba diving." - Wikipedia

2016 was the 70th birthday year of Aqualung - Spirotechnique, which was to be celebrated worldwide by Aqualung distributors and dealers in remembrance of this achievement, and what it had implied for the diving 'industry'.
However while the rest of the world was celebrating, the top Air Liquide - Aqualung management had already entered into negotiations with private equity firm Montagu, to decide on the fate of Commandant Cousteau's legacy.

As per my esteemed colleagues at X-ray Magazine:

"As 2016 came to a close, announced that they had completed the sale of the pioneering firm Aqua Lung to Montagu Private Equity on Friday 30th December 2016​"
The press release was short, simple and non explanatory as is usual when equity firms take over a company, as follows:
"Montagu will support Aqua Lung's next phase of growth and enable the company to deliver on its strategy. "

So what's the problem, will you say? A cash injection, and the future looks bright for Aqualung fans?
Nothing could be further from the truth for us dive professionals, and the diving 'industry' at large.


Since the takeover of SSI by Mares (owned by the public company Head N.V) and their strategy of combining equipment with education, the expansion proved to be a win/win for both SSI and Mares, de facto creating a conglomerate, obviously at the expense of market leaders like PADI (for education) and Aqualung (Equipment).

Although at the launch of the double whopper combo MARES-SSI in Egypt SSI dealers were told that MARES would not be pushed onto them it was clear for some of us, where this would lead us:

Become a diving instructor SSI and get your free MARES gear, in effect using the breweries concept of getting perks if you get the two packaged. For SSI diving centers contemplating the move to MARES, negotiations were made on a case per case basis; but stories abound of long term 'lease contracts'  including an entire refresh of their equipment inventory for 'free' which obviously was widely accepted. The tables were slowly starting to turn for PADI towards SSI. But at the same time bye bye quality and standards.

In light of the above PADI which was losing market share, and under pressure of it's professionals started to slack it's hunger for money (which was fueled by their own little equity firm takeover
in 2012, obviously wanting a quick ROI) and tried to counter this attack on their hegemony in diving education.

FYI: PADI got bought and sold like a rag doll a few times since: twice in 2012, first to Seidler Equity Partners then shortly thereafter in the same year by Lincolnshire, then in 2015 by Providence, and now ,merely a year 1 1/2 later Providence announced it would sell the PADI portfolio in 2017 for a whopping 1 Billion $.
By the way sorry to bust the bubble of so many PADI Instructors worldwide that think PADI is actually an association... lol (They were actually sued once because of this, and promptly PADI Aware was born)

But now comes the interesting part:
Who is in charge of the sale? None other than the European based Deutsche Bank, and incidentally Deutsche bank is usually the sole financial adviser to Montagu. (are you starting to connect the dots?)

Not yet? Well then continue reading...

Last year I was shocked to hear that Aqualung was colluding with PADI, (a joint marketing campaign had been launched to promote Aqualung's new dry-suits in France). Alarmed that I would end up falling back in an SSI/MARES scenario which I had left previous to their MARES takeover (where I had  worked as an executive in Egypt, and later on as an executive consultant for France/Belgium).
I promptly contacted my partner here in Egypt, and thereafter his superiors in France, which aroused my suspicion even more when the person I contacted promptly tried to explain to me that PADI and Aqualung had a joint past.

Here follows the conversation:

Henri to Aqualung France: I hope you guys are aware that you will also loose some fans of the Aqualung brand if you bind yourself to PADI. I'll b one of them, it is not because the Mares/SSI campaign is seemingly working that this is the right answer, in my opinion. Thought you should know. Loyal fan of US Divers - Aqualung since '88​

The reply:

Hello Henri,
what a strange message.
If your a loyal fan of US Divers-Aqua Lung you should know than since 1966 we're bound to PADI (https://www.padi.com/about-padi/padi-history). John Cronin, a scuba equipment salesman for U.S. Diver created PADI at that time. The picture we take today is the continuity of our shared story, nothing to see with SSI/Mares. We have other options to fight that situation.
PADI & the Aqua Lung group have some common DNA, sorry if you don't like it but sometime we built up some "programs" to help the development and the growth of our diving business. It will be the case soon on the french market.

Upon which I replied:

Cousteau created CMAS & NAUI long before that...
I understand there's a need to continue developing the diving business.
Joint marketing with PADI, when it comes to B2C fine!
However on the 'PRO' market, an open approach without too much binding yourself to an educational company that forfeits educational value = quality, for income and balance sheets would be more sane.
PADI does not  reflect the same values as Aqualung period.

And then there was silence ;)

As a consultant for GLG I am called upon on a yearly basis to consult for anonymous investors, and I usually get called in just before something major happens in our industry.
This trend started prior to PADI's takeover (2012), and has been regular ever since.

So on a side note I probably provided high level consulting conference calls for all the above mentioned companies, or rather the equity firms behind them to give my insight on the industry.  (lol, I almost feel like a double agent now).
Anyway let's get back to the development at hand and my conclusions:

I believe (I could be wrong, but everything points to the contrary, obviously only time will tell) we are going to see a PADI/Aqualung block emerge to counter SSI/MARES, and a bloody battle will ensue that till now has largely been fought on the backstage.
Is it good for Instructors, and Diving Centers who hope to profit from this debacle.... most probably.


But is it good for the real Dive Professional and Quality oriented operation and the recreational diving industry at large?

No, not at all, is my answer.

A battle always means concessions on quality have to be made (and god knows PADI lead the way and in the meantime SSI caught up on the game of dropping their standards so as to make more income), just look at how the shear amount of old skool quality SSI professionals who migrated in mass to DiveRaid, when SSI changed tactics. Or PADI to SSI depending on which level of quality education you were accustomed to.

As an ex corporate - executive in the diving 'industry', turned independent consultant; I will not be associated with investment funds in any way. I will not be dictated by a manufacturer how to learn people to dive, and vice versa I will not be dictated or spoon fed a brand of equipment; and certainly not for some nameless investors hoping to make a quick buck.

Therefore I have decided to sever my relationship of over 25 years with these conglomerates and will turn my attention to Dive Poseidon, Hollis, Maya, BFTB, DIVE RAID and so many more SMB's (small and medium sized businesses) that produce quality Diving & Waters ports gear and services, some of those since decades with impeccable track records.
Their dedication, hard work and passion for the industry deserve the support of EVERY quality DIVE PROFESSIONAL worldwide!

For the 'Executives' who have so called guarded the legacy of Aqualung for 70 years I have one message:
With such an amazing brand how could you fail so badly? The Captain innovated more in his active diving years , than the combined management teams have done since.


If you are interested in knowing more or actively want to change the industry of today towards professionalism, or need advice please don't hesitate to contact me.
Please give my page on FB a like to stay updated, and don't hesitate to comment below or even better share this article to your colleagues.

Thanks for reading!


SOURCES:
Unite Against PADI increase: https://www.facebook.com/groups/243763705784372/?ref=br_rs

Aqualung sold to private equity firm courtesy of Rosemary Lunn (you rock girl!) and X-Ray Magazine:
http://bit.ly/2mrxma6
http://www.xray-mag.com/content/aqua-lung-sold-private-equity-firm

Montagu - Deutsche Bank relation:
https://www.montagu.com/news/montagu-private-equity-announces-the-sale-of-cory-environmental/
Lincolnshire Equity:
http://www.lincolnshiremgmt.com/portfolio/
https://www.pehub.com/2012/08/ny-firm-inks-second-deal-after-year-long-drought/
Providence Equity - PADI:
http://www.provequity.com/portfolio/padi
Providence eyes quick flip of dive instruction business PADI at up to 1Bn.:
https://www.altassets.net/private-equity-news/by-news-type/deal-news/providence-eyes-quick-flip-of-dive-instruction-business-padi-at-up-to-1bn-valuation.html

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Thursday, 24 May 2018

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