- Unique and creative goods marketplace Etsy announced it acquired Reverb Holdings for $275 million recently. These are the details behind the deal.
Etsy — the largest marketplace for unique and creative goods — announced recently that it signed a definitive agreement to acquire Reverb Holdings for $275 million in cash subject to certain adjustments with respect to cash, debt, working capital, transaction expenses and the value of equity awards granted in connection with the transaction.. Reverb Holdings is a privately held marketplace for new, used, and vintage music gear.
Reverb will continue to operate as a standalone business when the deal closes. The company was founded in Chicago in 2013 on the principle that buying musical instruments should be easy and affordable. Generally, Reverb’s sellers are individuals, brick and mortar retailers, dealers of all sizes, and high-profile artists.
Etsy noted that the music gear industry is unique in that items are often bought and resold, numerous times. And traditionally, musicians only had access to instruments they could find locally or on resale websites that weren’t tailored to the music industry.
Plus musical instrument retailers were often limited to regional customers and musicians had fewer options for reselling used gear. And Reverb has created a destination for the global music community to come together online. This essentially gives sellers a global audience and musicians around the world access to more inventory and rare, highly-coveted items. Reverb’s highly engaged community includes both buyers and sellers.
“Vibrant two-sided marketplaces are lightning in a bottle – there are only a handful of them operating at scale – and Reverb is one. This transaction is a great strategic fit that firmly aligns with our mission of keeping commerce human. Reverb is the ‘Etsy’ of musical instruments, with significant competitive advantages, and we see tremendous value and untapped potential in the business,” said Etsy CEO Josh Silverman in a statement.
Silverman also explained that there are a number of similarities between the levers of growth for Etsy and Reverb. This includes “improving search and discovery, making selling and buying easier, and building a global brand and user community.”
“In a short amount of time, we’ve built a community that musicians from all walks of life turn to for income to support their families, inspiration to fuel their passions, instruments to create new music, and so much more,” added Reverb’s founder and CEO David Kalt. “We’re excited to continue growing our marketplace, team, and community as part of Etsy. We’ve always found inspiration in Etsy. In fact, the company gave me the confidence to launch Reverb when I saw the need for a musician’s marketplace in 2013. We’re excited to align ourselves with a marketplace that has been supporting artists, makers, and creative entrepreneurs for nearly 15 years. Together, we’ll continue to create a destination online where the music industry connects over the perfect piece of gear.” Kalt has decided this is the right time for him to make a transition, and will continue to serve as CEO until Etsy identifies a new leader of the business. He will remain closely involved to provide leadership and support following the closing.”
Reverb essentially enables Etsy to expand into a new vertical with a company that has a similar strategy and business model. And Reverb’s seller base spans many countries with key markets including some of the same ones as Etsy like the U.S., Canada, UK, France, Germany, and Australia.
“As we have said, our M&A strategy looks to put our capital to work in an opportunistic wayfinding great businesses at the right value – and we believe Reverb is just that. Reverb shares our mission, has a nearly identical business model, a strong brand in a large, fragmented market, and healthy growth dynamics. We plan to run Reverb as a standalone business, sharing knowledge and best practices across key marketplace growth areas such as marketing, seller services, and international,” explained Etsy’s CFO Rachel Glaser.
