Last Monday, Etsy announced its $275 million acquisition of Reverb.
Reverb is a Chicago based music gear marketplace and community. According to Barron’s and Pitchbook, Etsy is not a frequent acquiring company. In fact, their most recent acquisition was Blackbird Technologies in 2016. However, the companies both cited the significant synergies that this transaction created for Etsy and scale that it provided Reverb.
Reverb reported revenue in the $30-40 million range, and thus, the acquisition marks a 7.5-7.9x revenue multiple for the acquisition. This multiple appears to be inline with other recent acquisitions in similar industries.
In a press release put out by the companies, Josh Silverman, Etsy CEO stated: “Vibrant two-sided marketplaces are lightning in a bottle – there are only a handful of them operating at scale – and Reverb is one…Reverb is the ‘Etsy’ of musical instruments, with significant competitive advantages, and we see tremendous value and untapped potential in the business.”
The transaction will allow Etsy to enter a new vertical industry with a company that has a similar strategy and business model. Reverb offers a variety of musical instruments that are sold direct and often as resold, used equipment. Reverb has built a strong, known brand amongst instrument buyers and has been growing rapidly since its inception in 2012.
While Etsy intends to transition Reverb’s employees, David Kalt, Reverb’s founder and CEO “has decided this is the right time for him to make a transition, and [he] will continue to serve as CEO until Etsy identifies a new leader of the business.” (from the Press Release announcing the acquisition.
Kalt went on to say, “In a short amount of time, we’ve built a community that musicians from all walks of life turn for income to support their families, inspiration to fuel their passions, instruments to create new music, and so much more. We are excited to continue growing our marketplace, team, and community as part of Etsy. We’ve always found inspiration from Etsy. In fact, the company gave me confidence to launch Reverb when I saw the need for a musician’s marketplace.”
The transaction is expected to close in the fourth quarter of 2019. For more information about the transaction, check out Reverb’s website: www.reverb.com.
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