In what can only be described as a case of yet another European business overpaying for American assets, GN Store Nord’s ReSound division purchased the Audigy buying group for $91 million, with Bloomberg Technology reporting another $60 million is up for grabs in performance incentives.
Why do we say they overpaid for the 250 provider, 600 point-of-sale network which sold 80,000 hearing aids last year? Let’s do a couple “back-of-envelope” calculations: Taking the $91 million figure, we see they paid about $1100 per aid sold annually. Viewed another way, they paid $150,000 per point of purchase, with each location staggering along at not even 12 hearing aids/month. Unless they see something we don’t, it looks like Bill Austin’s son Brandon Dawson took GN to the cleaners.
The only sense we can make of this deal is that they plan to stuff the practices with their GN Otometrics audiologic test equipment with generous financing terms, to turn the locations into full-service diagnostic audiology clinics. Beyond that, we just don’t see the hearing aid volume to justify the price.
We welcome a reply from GN.
- GN Store Nord Agrees to Pay as Much as $151 Million for Audigy. Bloomberg Technology, May 15, 2016
- GN ReSound has signed a supply agreement with Audigy Group and entered into a contingent agreement to acquire the company. NASDAQ Global Newswire, May 15, 2016.