International Dealer News IDN 148 April/May 2019 | Page 32

THE AMERICAN REPORT
Tucker and MAG reboot
At the Tucker Dealer Expo at Fort Worth, Texas, in late January, IDN sat down
with new Motorsport Aftermarket Group (MAG) CEO Hugh Charvat and
found a man at ease with the challenges and opportunities he faces; a man
determined to take the first steps on a road that should see MAG
successfully draw a line under its recent past...
he owner of Tucker
Powersports (until 2018
known as Tucker Rocky)
and a slew of leading
aftermarket brands such as
Vance & Hines, Performance
Machine, Kuryakyn, Answer,
ProTaper and, until recently,
Renthal, MAG (Motorsport
Aftermarket Group) has had a
rocky decade.
Hit hard by the global economic
downturn and the decline in the
domestic U.S. powersports industry
that continues to this day. As was
widely reported at the time, the merger
of MAG with Tucker in 2014 was
eventually followed by a bankruptcy
protection filing and subsequent
change of ownership some 18 months
ago.
The new CEO (appointed in October
2018) is Hugh Charvat, someone who
brings a rare combination to one of the
market's hottest of hot seats - a blue
chip resume of relevant business
experience and a genuine passion and
enthusiasm for powersports and
motorsports of all kinds.
Asked for his assessment of the
challenge he was taking on when
accepting the MAG job, he said he'd
done his research thoroughly. Being no
stranger to how private equity
generally operates, he said that "the
[2014] Lacy (LDI) acquisition from
Leonard Green and Partners was fairly
typical of its kind. The company had
been leveraged with debt at the time
of the deal, but through the filing
[September 2017] they were able to
wipe the balance sheet clean. The new
owners [a consortium of three equity
investors headed up by New York
based Monomoy Capital Partners]
have been very mindful to make sure
history doesn't repeat itself and that,
on emergence from the filing, the
business hasn't been overburdened
with debt again.
"So that is positive. But then you have
to look at the reasons why the
business failed. Yes, you had the
overall downturn, but coming out of
the downturn, motorcycle sales have
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continued to be mostly flat to down [in
the United States] ever since. Our
consumers have still not, really,
completely started to open up their
wallets and spend on helmets,
apparel, hard parts and accessories
again like they did.
"I don't think anybody can look to the
market to start doing them any
favours. We are not going to be seeing
any unbelievable rebound with people
starting to buy new motorcycles like
crazy again tomorrow. Now, with that
said, people are buying motorcycles,
but they are buying used - so that is a
"people buy
from people"
dynamic that suggests that the future
for businesses like MAG, like Tucker, is
brighter than might otherwise be
thought.
"But in that context, you look at what
puts a business like MAG and Tucker,
with that potential, into bankruptcy,
and you have to say that some pretty
poor decisions had been made."
Charvat's remarks when we met him,
and his open, transparent and honest
appraisal of the history he's inherited,
and the challenges the group faces
(self-inflicted and otherwise), came as
a breath of fresh air.
"For example, you take a business like
INTERNATIONAL DEALER NEWS - APRIL/MAY 2019
MAG, with some legendary brands like
Vance & Hines, Performance Machine,
Kuryakyn and the other business units
MAG owned, and you look at
combining them, and with a powerful
distribution business like Tucker into
what you could call 'vertical
integration,' and that looks to have a
certain logic.
"In a conference room, on a white
board, that may well look like it made
a lot of sense, but while you have a lot
of very bright people working in
private equity, very few of them are
what you'd call experienced as
individual business operators.
"I'm sure that when the decisions
were made on an income forecast
level, they may well have thought that
this is what the future may well look
like. But what they didn't appreciate
were the nuances of the distribution
industry. At the end of the day people
buy from people. While you have
dealers who see Tucker as a great
supplier and partner, you also had
those who weren't buying from Tucker.
This 'vertical' concept allowed dealers
to start seeing Tucker as a competitor.
"The moment you mandate that you
can no longer buy a particular product
direct or through an alternate
distributor of choice, but have to buy it
from Tucker, that just incenses them. So
they decide to go and buy an alternate
product, or from another supplier, and
you chase that business away, all
because you were trying to chase this
'vertical'.
"Some of the decisions that were
made to try and force this 'vertical'
were inherently flawed, and some
"the importance
of relationships
has been
underestimated"
decisions that were made on the
manufacturing side, to try to pull some
business footprints together, just
weren't ever going to work either.
"I think there was a lack of
understanding. An understanding of
how those products are taken to
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