What do you think led to the bankruptcy?

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wistech · #21 Post by **wistech** » Mon Jul 16, 2012 2:53 pm

Ouch this hurt to read while looking for a bicycle.

04-19-09, 04:20 PM
I hate to be the nay-sayer in the discussion, but we the consumers are to blame for Cannondale moving off-shore. We demand more and more for less and less. We have tools at our disposal that allows us to shop for the best products, the best price without even leaving the confines of our comfy chair or via a stokers seat on their cell. We leave our local shops in the dust as we try to save a couple of bucks. (No I am not a shop-owner)

As investors we demand our investments to increase in value and produce better returns. With all of this in mind what is a company to do. To survive based on our demands (Investors and Consumers) they have to find low cost production facilities. The only way we can stop this madness is to accept higher prices. However as we are all capitalist we look out for ourselves.

I hate to be a naysayer to a fellow naysayer but there is more to the Cannondale story than you've taken the time to learn. I own two Cannondale tandems, a Cannondale mountain bike, and a Cannondale 3.0 road bike, and I used to own BIKE (Cannondale stock) before the original bankruptcy.

I'm 6'7", have a 100cm inseam, and everything else I've ever ridden feels like spaghetti at the bottom bracket. While many people love to rave about how 'steel is real', the truth is that a partiuclar frame material is not "best" for everyone. A guy who is five feet nothin' and a hundred pounds dripping wet can't begin to imagine how a frame feels to me, or what real bottom bracket flex is like. I weigh more than some diminutive captain/stoker teams, keep in mind.

I love Cannondale, but what went wrong was malfeasance on the part of Joe Montgomery and the board of directors. Joe Montgomery (then CEO of Cannondale and the largest shareholder) wanted to build a multi-million dollar house. Only he didn't want to have to pay for it by selling shares of Cannondale stock. So the board of directors of Cannondale agreed to divert millions of dollars from the Cannondale coffers to build Joe's house in what was called a 'swingline' loan. This occurred when Cannondale was cash poor and attempting to go into new markets with the innovative motorcycle/atv line. The whole idea was that the Board of Directors didn't want Joe to default on a home loan secured by his Cannondale stock to a private bank and have that stock liquidated to pay off his loan. That would mean Joe didn't control the Cannondale stock with a majority, and thus couldn't control the company or handpick his board members. So Joe, and his Board agreed to compromise Cannondale's financial solvency to give Joe a multi-million dollar home without having to risk losing his Cannondale shares to a public liquidation. Why the concern, because Joe, and the Board, having inside knowledge knew that the stock valuation was going to tumble based on financial difficulties the company was having related to the motor division. So the people Joe hired, and paid, agreed to mortgage the future of Cannondale, in a corporate "bust-out." The board knew that if Joe lost majority control they would be ousted over the failures of the motor division experiement.

Joe got his multi-million dollar house and only lost worthless Cannondale stock. He couldn't have unloaded that much Cannondale stock to actually finance the house without SEC filings, thus affecting valuation. The Board got millions in additional compensation, and Cannondale was bankrupt.

All of this occurred when several million dollars would have prevented Cannondale from entering reorganization in the first place.

Cannondale's demise isn't to be blamed on customers buying cheaper brands or online purchases. Cannondale doesn't care if you buy online or from a dealer (they get the exact same price - wholesale).

Cannondale, after multiple reorganizations, and trips through bankruptcy is going offshore because of corporate malfeasance. Its the Enron of the bicycling world.

Happyboy · #22 Post by **Happyboy** » Mon Jul 16, 2012 3:00 pm

oh wow, where did you find that at?

wistech · #23 Post by **wistech** » Mon Jul 16, 2012 9:01 pm

It was on a bike forum. It just sucks having to listen to people blame the machine for cannondales downfall when the leadership pretty much threw it away buying houses and private jets for a handfull of execs which was far more than they spent on the actual machines

jesshamner · #24 Post by **jesshamner** » Mon Jul 16, 2012 10:35 pm

I don't think it can be pinned down on just one thing. Poor bike sales, a new division with uncertainty behind it, especially with a poorly received dirtbike, bad reputation. And whatever else... all go into it.

promod · #25 Post by **promod** » Mon Jul 16, 2012 10:48 pm

But also as a former dealer through it all, i also know C'Dale spent a lot of money on taking care of there customers and dealers who had problems!, out of all the other bike manufacturers i have dealt with in working in the powersports industry for over 30 years, no one! and i mean NO ONE had better customer service when a problem happened!, They would next day air engines, frames, parts and even complete machines would be replaced to keep the customers and dealers happy...they spared no expense to correct there mistakes (and that was a huge chunk of $$$$), rather there fault or customer/dealer learning curve faults! And i will always give them high praise for that and as i have stated before Joe and his company were very good to me personally...even though when they went belly up it cost me a whole lot...my dealership! But i still have love for these machines that i cant explain! and like another brands slogan says...."If i had to explain you wouldnt understand!"

wistech · #26 Post by **wistech** » Wed Jul 18, 2012 2:51 am

http://www.thefreelibrary.com/Cannondale+C......-a0132314657

speed 450mx · #27 Post by **speed 450mx** » Thu Jul 26, 2012 3:08 pm

I always Knew that Pegasus pulled the plug early. It said in that artical that they had tell 2004 to pay off there debt.

wistech · #28 Post by **wistech** » Fri Jul 27, 2012 2:01 am

Sales were doing OK and even the new MOTO's were selling like hotcakes but when your not doing much more than just breaking even for the third year and managment is throwing money away on toys and guaranteed personal loans for the big whigs pegasus put and end to that.

2002CannondaleMoto440Racer · Sat Sep 15, 2012 7:10 pm

So how come cannondale doesn't try to get back into the Motorsports market and try again? I am sure they could be a big success if they would look back to all their problems with the machines, they could correct all of the problems and have good machines out on the market. Plus I am sure a lot of people would buy cannondale quads and bikes if they made a come back

who_gives_a6 · #30 Post by **who_gives_a6** » Sat Sep 15, 2012 11:47 pm

Being that the company isn't even remotely close to what it once was, and is produced overseas even, I seriously doubt they'll ever look into a comeback. They also no longer own rights to anything, so would have to start from scratch, again.

Also, I don't see people buying them either. They reputation of engines grenading will never go away. I went to a track several months ago and when I unloaded, another rider said I must have gotten a fluke, because it was running. Said he'd never heard of one lasting more than a few hours. I won't give a name, but he's currently one of the top riders in Quadcross out west in the pro class. Every time I show up to ride somewhere I get this response, or people telling me to be careful because it'll explode or catch fire. The reputation is bad and always will be. If Highland does make an attempt then I hate to say it, but I see them having a similar issue as Cannondale when it comes to sales, even if they're bulletproof machines. They'd have to find a way to get a quad or bike under $8000 to even stand a chance in the current market in my opinion.