For various reasons, we draw all sorts of conclusions about other people. Sometimes it is justified. At other times it’s irrational. As a result, it is very easy to create a caricature, sometimes based on ignorance. It’s no different when it comes to brands or, indeed, types of business. Private equity is one such sector that seems to polarise opinions, it has somewhat of a bad reputation, and it doesn’t take too much investigation to see why. Finding good private equity stories is tough. Even brands we know who have benefitted from private equity finance were unwilling to talk about their experience, on or off the record.
We spent days looking for information to support a narrative that private equity is a good thing for the business being acquired. On the whole, all we found was data to support the trope that private equity is the big bad wolf. The resources we found weren’t journalists with an axe to grind but respected educational institutions who had data to back up the commonly held view that private equity firms acquire a business, cut costs, maximise profit and then sell in five years. It’s no wonder that the news of the acquisition of Avid by STG has wobbled a few people and created concern about the future of Avid and the products professionals depend on.
With all this negativity in mind, how could Avid’s new owners STG prove to those concerned about the Avid acquisition that this is not a private equity company that reverts to type?
Here are some areas we suggest are key indicators.
Addressing Product Concerns
One of the main concerns customers often have during a private equity acquisition revolves around product quality and innovation. Users worry that a focus on profitability might compromise the features and performance they've come to expect and rely on. To address these concerns, Avid needs to emphasise its commitment to maintaining and enhancing product quality and innovation:
The Private equity pitch would suggest that the injection of capital from a private equity firm will facilitate increased investment in research and development. This investment can lead to breakthroughs in technology, improved features, and products that truly resonate with customers' needs.
However, it is not always the case. There’s been clear evidence in this sector that some private equity acquisitions have had the opposite effect. We have seen previously innovative brands no longer demonstrating continuing innovation, with new features few and far between, updates to existing products slow, and products being killed off, leaving users having to find alternatives. A reputation that took decades to create is damaged within months. It’s a case of ‘actions speak louder than words’.
Therefore it is essential for Avid to clearly demonstrate continued, if not accelerated, investment in innovation. Here are some areas; like better tools for composers, and adding features that have been in other DAWs for a significant time but are missing in Pro Tools; it seems odd that the ‘industry standard’ DAW is one of the only DAWs to lack a fully integrated Atmos workflow. ARA is another area, Melodyne integration is a good start, but there are plenty of other developers, such as Synchro Arts, who have powerful tools that would benefit from Avid accelerating the ARA integration roadmap.
Hardware is expensive to develop and can take years to bring to market, and this is one such area that is an indicator as to whether there is a long-term investment or simply a case of pump and dump.
Under Jeff Rossica’s leadership, Avid has made great strides in the last few years with groundbreaking products like Carbon, MTRX and Avid Control and S1 - and as users and customers, we want to see more, not less, of this. The last thing large facilities want to think is that their large format S6 control surfaces are going to become expensive bricks.
Transparency In Product Roadmaps
One reason that public companies give for secrecy about product development is that SEC rules prevent them from being as open as they would like. We explain this in more detail here.
Of course, secrecy is not just about that. Even private companies keep their future plans secret to gain a commercial advantage. That is understandable. However, once Avid is private, they are then free from such rules and can choose to be more open about sharing their plans.
Sharing the company's product roadmap post-acquisition will help demonstrate Avid’s commitment to ongoing innovation. In the fast-moving world of audio and video technology, Avid’s customers will appreciate the insight into what's on the horizon. This kind of information engenders trust and helps large organisations plan their investment.
This can be in the form of information about future developments and the use of public beta software. Companies like Blackmagic Design continually use the public beta model for DaVinci Resolve. The end user finds this both useful on a practical level, and it also creates a sense of being ‘in it together.’ It’s a practical way of creating a more symbiotic relationship in which both parties benefit, and it’s an effective way of reducing the sense of ‘them and us.’
The Pricing Model
Customers also fear that a change in ownership could lead to unfavourable pricing models. Not everyone in the audio industry is a fan of software subscriptions, even less so when they feel they have no choice. If a product is the industry standard, then this adds another level of feeling strong-armed into the subscription model. It can leave a nasty taste in one’s mouth and does little to build customer loyalty.
SaaS is an understandable model for software developers, it creates a steady and expected stream of income. It helps companies with their investment and planning for the future. It’s a commonly used tactic in the world of private equity.
Avid should be brave and allow users the choice to buy and use Pro Tools as either subscription or as perpetual, and more importantly, without penalising users who make the choice not to subscribe.
It’s been good to see a clearer pricing structure for Pro Tools adopted, offering different and more cost-effective ways into the Pro Tools eco-system. Avid should continue to simplify the pricing and remove any ambiguous messaging around subscriptions, service plans, and other things that can make navigating the cost of ownership confusing for the average Pro Tools user.
Simply put, it should be tiered pricing, a choice to subscribe or own a perpetual licence, and the removal of weird ‘unless you pay this, you lose your seat at the table’ type plans.
Customer-Centric Approach
One area where Avid has excelled under the leadership of Jeff Rosica has been a customer-centric approach. Not only with the official ACA (Avid Customer Association) but also in his own willingness to visit customers around the world to see what is really happening on the ground.
We would like to see more of this from Avid. Continue to engage customers in the decision-making process. Seek their input on product features, improvements, and pricing strategies. This shows that the company values their opinions and is dedicated to meeting their needs. We know that not every idea is going to be implemented, but ideas that are built around consensus are hard to ignore.
Highlight the long-term value proposition. Assure Avid customers that the partnership with the private equity firm is aimed at sustained growth and ongoing improvements that will benefit them over time. Use communication channels to keep users updated on the things that matter to them. Use social media not simply as a showcase for Avid’s success and cat videos but also use it to gather feedback. Not everyone can travel to meetings or trade shows. Many no longer use email, with social media being their preferred way of communicating. Avid needs to make sure social media is not just used as a broadcast tool. It can suggest the appearance of a busy and active brand activity but, in many cases, creates more heat than light.
Support
Reducing support is an easy way for private equity investors to save a lot of money. However, Pro Tools and the other Avid products are industry-standard solutions that many professionals depend on. Downtime is something that can prove costly, both to the bottom line and the user’s reputation.
Investment in a great customer support experience has to be a priority. Support that takes minutes or hours, not days or weeks. Any slower simply won’t cut it in the fast-moving world of media production.
Support is expensive to fund. However, smaller companies, many of them single-person operations, are able to excel at customer service. Perhaps because it’s easier for them to make the connection between an upset customer and their income?
Large organizations can establish cost-effective customer support by integrating AI-powered chatbots and self-service portals. A tiered support structure and skilled support teams can address complex issues efficiently. One key area is cultivating empathy within the support teams. This helps fosters a sense of customers being heard. Personalised communication and timely follow-ups show individual customers their value. Some of this is already in place at Avid. However, signs of Avid support getting better, not worse, will be an easy metric for the average user to measure.
Summary
Private equity acquisitions can be a transformative strategy that breathes new life into companies; we’ve seen it with companies like AudioTonix, the owners of Solid State Logic, Sound Devices, and Harrison. It also seems to be working well at IK Multimedia.
By proactively addressing concerns about products and pricing and focusing on innovation and customer satisfaction, Avid could demonstrate the positive impact of this private equity acquisition. With a well-executed strategy that pays attention to the areas outlined in this article, Avid can not only alleviate customer concerns about the future but also set the stage for a future characterized by growth, innovation, and exceptional customer experiences. Watch this space.