Steinway & Sons, a leader in high-quality grand pianos since 1853, has undergone multiple ownership changes due to financial difficulties, including sales to CBS, the Birmingham brothers, and Selmer. The company faced challenges such as declining product quality, loss of dealer and worker confidence, and increased competition, particularly during a downturn in the piano industry. Despite these issues, there are future opportunities for Steinway, particularly in improved economic conditions and potential growth in the Asian market.

1. CASE ANALYSIS
STEINWAY AND SONS :
buying a legend

2. COMPANY BACKGROUND

3. For 140 years, Steinway & Sons has been
recognized as a leader in the market for
high-quality
grand pianos. Established in New York City
in 1853 by Henry Engelhard Steinway, a
German
immigrant, the firm quickly prospered
because of its technical excellence.

5. STEINWAY ARTISTS

7. Timeline of
Steinway & Sons

8. After 120-years of family control, it was
decided that Steinway could no longer
survive as a closely-held family
operation. THE OWNERSHIP OF THE
COMPANY WAS SPREAD AMONG MANY
FAMILY MEMBERS UNWILLING TO
INVEST IN CAPITAL leading up to the
sale of Steinway in 1972 , REASONS
BEING PRIMARILY FINANCIAL
Steinway & Sons :1853-1972

9. The CBS Years :1972 - 1985
Company was sold to the CBS Musical
Instruments Division
in 1972 for about $21 million in CBS
stock.
CBS’s management of Steinway came
to a close in 1985. In November 1984,
despite being
moderately profitable, CBS announced
plans to sell its Musical Instruments
companies and to focus
its efforts on broadcasting

10. The Birmingham Years :
1985 - 1995
Company was sold to the Birmingham
Brothers in 1985 for about $50 million.
Birmingham's did something that
Steinway & Sons had resisted
throughout its history. They introduced
a mid-priced piano The Boston Piano
Finally, in late-1994, the Birmingham's
decided to sell the company.

11. The company was again sold on April 18,
1995 to Dana Messina and Kyle .Kirkland,
Messina & Kirkland :
April 18, 1995

12. On April 18, 1995, the Selmer Company agreed to purchase
Steinway & Sons for $101.5 million . At the time of the purchase,
Selmer was the leading manufacturer of band and orchestral
instruments in the United States.

13. Selmer financial information prior to acquisition by steinway

14. Following the purchase of Steinway & Sons, Kirkland
and Messina formed Steinway Musical Instruments,
Inc., with Steinway & Sons and Selmer as wholly-
owned subsidiaries. Within this newly formed company,
Kirkland was named Chairman of the Board and
Messina was named Chief Executive Officer.

16. HOW JUSTIFIED WAS THE
DECISION OF
PURCHASING STEINWAY
FOR
$100 MILLION

17. PROBLEMS FACED
NO EXTANT SYNERGY
BETWEEN STEINWAY AND
SONS AND SELMER
COMPANY

18. PROBLEMS FACED
The company has changed hands several
times and product quality has been a
problem. Dealers and workers were losing
faith in Steinway & Sons.

20. PROBLEMS FACED
There are a few piano manufacturers that are
Steinway’s potential competitor Competition
•Yamaha
•Baldwin
•Kawai
•Faziloi

22. PROBLEMS FACED
The piano industry saw a down
turn in current years with
global sales falling by 40 %

23. PROBLEMS FACED
STEINWAY’S RECENT
INTRODUCTION OF BOSTON
PIANOS WAS A QUESTIONABLE
STRATEGY

24. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
STEINWAY WAS A PRE
EMINENT BRAND NAME
IN THE MUSIC INDUSTRY
AS THE PRODUCER OF
THE FINEST PIANOS

25. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
STEINWAY WAS THE
LEADING PRODUCER
OF GRAND AND
VERTICAL PIANO

26. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
ECONOMIC
CONDITIONS WERE
IMPROVING IN US
AND EUROPE

28. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
STEINWAY HAD YET
TO TAKE THE
ADVANTAGE OF THE
GROWING ASIAN
MARKET

30. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
STEINWAY WAS THE
LEADING PRODUCER
OF GRAND AND
VERTICAL PIANO

32. FUTURE PROSPECTS AND
EXCITING POSSIBILITIES
INCREASE IN SALES
OF VERTICAL PIANO
– BOSTON PIANOS

34. Role of Messina & Kirkland
As both Messina and Kirkland lack
experience in the piano industry, they
should hire a professional team from the
piano industry and they itself have gain lot
of experience from financial sector from
salmon so they handle financial activities.

35. These slides were created by
MAULSHRI PATHAK, as part of an
internship done under the guidance
of Prof. Sameer Mathur
(www.IIMInternship.com