Is TaylorMade Golf worth $2 Billion?

In 2017, New York-based equity firm KPS Capital Partners purchased TaylorMade from Adidas for $425 million.

Now, according to a report published by the New York Times, it appears that KPS is looking to sell the golf equipment brand. In the same article, it states that KPS hired Morgan Stanley to run the sale of TaylorMade, which could fetch somewhere close to $2 Billion. If it does, that would put TaylorMade in the ballpark of competitors Callaway ($2.71 billion market cap) and Titleist’s parent company, Acushnet ($3.15 billion).

This isn’t much of a surprise as the fundamental premise of equity firms is, like stockholders, to buy low and sell high. Considering that KPS bought TaylorMade for a relative bargain – basically $200 million in cash – any selling price at or near $2 Billion would represent a robust profit. Privately held companies typically don’t discuss the particulars of such situations. Therefore, there isn’t much water cooler talk around potential suitors, though I suspect it won’t be long before we start hearing some names.

The golf industry topped the $1 billion mark for club, bag, ball, and shoes sales in Q3 of 2020. Although it’s likely a pandemic-aided boom, it’s an important number because it’s only the second time that this has happened in any quarter and the first time in Q3. The equipment market appears to be relatively stable, a factor that likely weighed heavily on KPS’s apparent decision to pursue the sale of TaylorMade.

We will update this story as more information becomes available.