Kona Bicycles Founders, Advised By Bell Lap Advisors, Reacquire The Brand

Date

May 2024

Client

Dan Gerhard and Jake Heilbron

Service

Buy-Side M&A Advisory

Seller

Kent Outdoors, a portfolio company of Seawall Capital

Cycling, Mountain Biking, Wholesale, Independent Bike Shops, Carve-Out, Outdoor Recreation

Kona Bicycles co-founders Dan Gerhard and Jake Heilbron reacquired the company they started in 1988, purchasing the brand back from Kent Outdoors. Terms of the transaction were not disclosed. The founders acquired Kona’s assets and assumed certain liabilities, and operate the business through a newly formed entity, Kona Bicycle Company, Inc. Gerhard serves as president and Heilbron as Chief Operating Bicyclist.

Bell Lap Advisors advised the founders on the buy-side. Bell Lap had previously advised Kona on the sell-side when the company was acquired by Kent Outdoors in January 2022.

Kona Bicycles was founded in Vancouver, B.C. in 1988 by Gerhard, Heilbron and Jimbo Holmstrom, and is known for its innovative mountain bike designs. Kona is considered the first brand to produce a line of sloping top tube designs, and was central to the North Shore freeride movement. The company maintains offices in Ferndale, Washington and North Vancouver, B.C. Holmstrom retired in 2023 and holds no role in the new company.

Kent Outdoors had announced in April 2024 that it would seek a buyer for Kona following a strategic review, stating, “The bike industry has faced very significant challenges in the post-Covid world and Kona has not been immune to these headwinds.” Kona was the only bicycle brand in a portfolio otherwise built around water sports and snow.

In an open letter to the industry, the founders wrote, “We founded Kona Bicycles in 1988 as a natural progression of our friendship, our ongoing working relationship, and our shared love of bikes. It was a wild ride, and when we sold Kona three years ago we believed that the new owners would carry our vision forward and continue to build great bikes, employ great people, and deliver on the promise of quality, fun and a little weirdness that had defined Kona for so long. Unfortunately that plan unfolded quite differently, so now we’re buying Kona back. Time for a do-over.”

The letter closed, “So, ring the bell and chime in the third chapter of the Kona Bicycle Company. A little older, and we hope wiser. A little bruised and battered, but still kicking and ready to take on what’s next in our story.”

Returning to private, founder ownership allowed Kona to reset its channel strategy immediately. In announcing the transaction, the company said it was pausing direct-to-consumer sales of all bikes and named its dealer network its highest priority: “Renewing relationships with our nearly 1000-strong North American and European dealer network is our highest priority. Most of us started out in bike shops, and in our eyes, IBDs are our strongest advocates and allies.”

Bell Lap Advisors, which advised the founders on the buy-side, is a leading M&A advisory firm focused exclusively on outdoor recreation and active lifestyle industries. Bell Lap Advisors is the most experienced M&A adviser for the cycling industry, globally, completing more deals in the cycling industry each year than any other firm.

Have questions about how our M&A Advisory services could help your business? Reach out to us today for a free consultation.

NOTES
Sources: founders’ letter published by Bicycle Retailer and Industry News, May 20, 2024; Kona press release reproduced in full by Pinkbike, May 20, 2024; Kent Outdoors statement, April 19, 2024.