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The Next Big Crestron Dealer is ... Guitar Center via AVDG Acquisition

Guitar Center acquires major Crestron dealer Audio Visual Design Group ostensibly for commercial installations, but AVDG also is a CE Pro 100 home-automation and A/V integrator.

The Next Big Crestron Dealer is ... Guitar Center via AVDG Acquisition
Recently acquired by Guitar Center, Audio Video Design Group could take the 280-store retailer into the big leagues of commercial A/V and home automation. The $30 million CE Pro 100 integrator was featured on the October 2016 cover of CE Pro.

Julie Jacobson · February 27, 2018

At the end of 2017, retailer Guitar Center acquired Audio Visual Design Group (AVDG), a major Crestron dealer and A/V integrator, catapulting the 280-store retailer into the big leagues of commercial integration and home automation.

AVDG will operate as a dedicated arm of the Guitar Center's new Business Solutions group. That group was formed last year when GC melded its B2B operations, serving live sound and commercial venues, into a single unit led Doug Carnell, former general manager of the giant A/V integration firm AVI-SPL.

While we know Guitar Center as a consumer-centric musical-instruments store with some 280 locations, the retailer has a rich history in B2B channels, historically focusing on studios, houses of worship, education, and bars/restaurants. 

“From a sales perspective, Guitar Center is bigger than all of the integration firms.” 
— Doug CarnellGuiter Center Business Solutions

With more than $2 billion in annual revenues, plus all that brick-and-mortar presence, Guitar Center can help AVDG compete against the "big three" commercial integrators, Carnell says, referring to AVI-SPL ($605 million), Diversified ($450 million+) and Whitlock ($300 million). AVDG generates about $30 million per year. 

“From a sales perspective, Guitar Center is bigger than all of the integration firms,” Carnell tells CE Pro sister publication Commercial Integrator. “From a market-competitive situation we have more locations and more capability and, in the case of some of the vendors, purchase multiple times what other integrators purchase.”

While B2B may have been the key driver of the acquisition, the implications for residential integration are not lost on Guitar Center. AVDG is a CE Pro 100 integrator, having moved into the residential sector only a few years ago. CE Pro detailed AVDG's transition in an October 2016 cover story. Today the company generates roughly 25 percent of its revenues from the consumer market. 

RELATEDHow Commercial Integrator AVDG Earns $5M Serving High-Tech Resi Clientele

"AVDG has distinguished itself in the industry by offering system design and installation in both corporate and residential market sectors," Carnell says in a press release, "providing Guitar Center an important channel to serve these markets ....."

For years, GC has worked with a network of "affiliate" integrators to specify, design and install commercial- and live-sound systems, including loudspeakers, mics, lighting, cameras, electronics, controllers, video projection and more.

Now it can bring more of these services in-house with AVDG, allowing Guitar Center to become the end-to-end supplier, specifier and installer of big and small systems alike, including projects in homes and office buildings where GC hasn't really played.

Carnell tells Commercial Integrator that Guitar Center could acquire more A/V integration companies in the future. 

The complete interview with Guitar Center's Doug Carnell appears in Commercial Integrator's exclusive story, "Guitar Center Acquisition of AVDG Creates $2 Billion-plus Pro AV Contender"

Overall the retail sector has suffered from Amazon and other e-commerce competition. Guitar Center has tried to diversify by offering music lessons in its stores, "hoping that a service component will draw more visits," Bloomberg reported in 2017. Enhancing its integration business with the AVDG acquisition (and presumably more acquisitions to come) is a much bolder move with bigger upsides.

In terms of buying power, AVDG easily trumps the "big three" commercial integration companies, and it may be able to exploit that dominance in the home-technology channel.

"As we incorporate new acquisitions to the family, my goal is to build and merge talent pools in a way that results in the best of all companies and efficient use of skill and expertise," Carnell tells CI. "In my mind, a whole team of CEOs from different firms can combine resources and perspectives to figure out ways to truly solve the market’s problems, while also focusing on providing the best customer experience. That’s where I think AVDG is going to contribute, from their unique experience of offering design-build services."

READ CI's COMPLETE INTERVIEW WITH GUITAR CENTER'S DOUG CARNELL


This story was edited on 2/27 to reflect current financial realities, and to point readers to the complete Guitar Center interview on CommercialIntegrator.com.



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  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at julie.jacobson@emeraldexpo.com

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  Article Topics


Control & Automation · Audio/Video · News · AVDG · CE Pro 100 · Commercial · Guitar Center · Mergers and Acquisitions · All Topics
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Comments

Posted by highfigh on March 1, 2018

Even with their on-going debt, they’re buying more companies? When does it stop? I don’t know if they paid for the goods, but Fender and Gibson have been owed a lot of money (said to be in the hundreds of Millions of dollars) for a long time and now that Gibson is nearing bankruptcy, maybe Ares Capital could do a solid for Gibson.

I’m surprised nothing was mentioned about Musician’s Friend, the online/mail order branch of GC.

Posted by highfigh on March 1, 2018

Even with their on-going debt, they’re buying more companies? When does it stop? I don’t know if they paid for the goods, but Fender and Gibson have been owed a lot of money (said to be in the hundreds of Millions of dollars) for a long time and now that Gibson is nearing bankruptcy, maybe Ares Capital could do a solid for Gibson.

I’m surprised nothing was mentioned about Musician’s Friend, the online/mail order branch of GC.