Last Updated on 06/29/2021 by GS Staff
Guitar Center is a private company. Since it is not publicly traded, you cannot buy its stock through a broker. It does not trade on a stock exchange or have a stock symbol.
Was Guitar Center Ever a Public Company?
Guitar Center first opened its doors in 1959. It was then called The Organ Center and it primarily sold organs for personal use and to houses of worship. The company got into the guitar business in 1964 and changed its name to Vox Guitar Center. The company later shortened its name to Guitar Center when Vox guitars and amps became less popular.
After the company experienced strong growth during the 1970s and 1980s because of the popularity of guitar rock, it became the largest musical instrument retailer in the United States. This growth allowed the company to go public in 1997 when it filed an initial public offering (IPO).
The company raised close to $100 million from the IPO and stated it would use the funds to pay down debt and open over 16 stores. Guitar Center’s stock first started trading on the Nasdaq on March 14, 1997. This was a horrific day for an IPO because the market fell 160 points. However, the company shares opened at $15 and closed at $18 per share for a nice 20% increase.
Guitar Center Goes Private
In October 2007, Bain Capital took Guitar Center private when they acquired the company for approximately $2.1 billion including debt. Guitar Center shareholders received $63 per share through this leverage buyout acquisition. Approximately seven years later, Ares Management LLC took control of Guitar Center through a debt-for-equity swap while Bain Capital maintained only partial ownership and board representation.
The deal reduced Guitar Center’s total debt by $500 million and its total annual interest payment by $70 million. However, the company still had a significant amount of debt even after the $500 million reduction in debt. Most of this debt (approximately $1.6 billion prior to the Ares deal) was brought on by Bain Capital’s leveraged buyout of Guitar Center.
Guitar Center Goes Bankrupt
The pandemic, heavy competition, and other factors played into Guitar Center filling bankruptcy in November 2020. The company filed a chapter 11 bankruptcy which allowed them to continue operations instead of liquidating stores/inventory. The negotiated restructuring allowed for $165 million in new equity, elimination of $800 million in debt, and new creditor financing. In addition to Areas Management, the Carlyle Group and Brigade Capital were behind the new equity deal.
Will Guitar Center Be Public Again?
It’s certainly tough to say whether Guitar Center will be public again. The company is relatively fresh out of bankruptcy and is backed by three investment firms. The company will likely let the dust settle before an IPO potentially will be in the works. You should assume that Guitar Center will remain private unless you hear otherwise.
Sources:
Vrana, D. (1997, March 15). Guitar Center IPO Strikes Right Chord. Los Angeles Times. https://www.latimes.com/archives/la-xpm-1997-03-15-fi-38405-story.html.
Image Credit – Mike Mozart/flickr
Reuters. (2007, June 28). Equity Firm Is Acquiring Guitar Center (Published 2007). The New York Times. https://www.nytimes.com/2007/06/28/business/28guitar.html.
Smith, J. B. in the. (2019, July 25). New Balance: Brand History, Philosophy, and Iconic Products. Heddels. https://www.heddels.com/2019/07/new-balance-brand-history-philosophy-iconic-products/.
