Polk Audio Acquired by Directed Electronics

On August 21, Directed Electronics, Inc. announced that it had entered into a definitive agreement to acquire Polk Audio for $136 million in cash, with the deal to close in Q3 of 2006. Current Polk management will join Directed, and company founder Matthew Polk and Polk president Jim Herd will sit on Directed's home audio advisory board. File this one under the you can't make this stuff up department: Sandy Gross, founder of Directed's other loudspeaker company, Definitive Technology, already sits on the board, which makes Polk's presence there a homecoming of sorts, since Gross was a founding partner at Polk.

With Definitive and Polk, Directed might well become probably the number-one best-selling loudspeaker force in the US market. If it seems that acquisitions have been coming fast and furious lately—the recent acquisition of API by Klipsch and last year's D&M acquisition of Boston Acoustics, for example—that is probably "less a reflection of dire times in component audio and more a reflection of founders wanting to tap into the wealth they built up in companies that they founded as long ago as the 1970s," Directed's president Jim Minarik told TWICE's Joe Palenchar.

Since Directed is publicly traded, there are strict rules about what can be said, printed, and leaked about the sale. The one thing that seems certain is that the acquisition was a friendly one. Given the price paid and Matthew Polk's continued presence on Directed's home audio advisory board, it's clear that Directed did not acquire Polk to gut it or, probably, even change its operation much. Polk, after all, did about $86 million last year.

Polk has generated an immense amount of customer loyalty over the years and we refer everyone to its website and The Clubhouse forum for a tutorial on how to cultivate customer loyalty and comport yourself with class. Polk marketing manager Paul DiComo announced the Directed acquisition there on August 22, and Polk aficionados vigorously debated whether it was a good thing or the end of the company as they know it.

On August 23, the man whose name is on the speakers weighed in. "One thing I've learned about change is that if you don't stay ahead of it, you'll be victimized by it," Polk wrote. "I like what I'm doing and intend to keep doing it. Plus, I've got quite a few interesting ideas I want to pursue. So, you can expect to find me in the usual place working the same strange hours. However, while we were working this all out, I did have sort of a funny discussion about this with the guys at DEI. I guess that they were worried that I'd take all the money and retire to the Caribbean or something. So, they wanted to know exactly what is it that I 'do' at Polk Audio.

"An interesting question. After all, I don't have a place on the organizational chart. No one reports directly to me. And, I have no formal job responsibilities. But, I seem to show up every day and work really hard at whatever it is that I 'do' and it seems to take up all of my time. So, they asked me, what will you do if we make this deal? 'Well,' I said, 'pretty much the same—whatever [that] is.'"

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