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Seidler Equity Invests In Hal Leonard

...structure of the company has changed, management and policies remain unchanged. Chairman and CEO Keith Mardak, President Larry Morton, and other senior managers continue as shareholders and have signed multi-year employment contracts. “We’ve had tremendous growth since I started with Hal Leonard in 1970,” stated Mardak, “but I think the best years are still ahead of us. Seidler Equity partners are an absolutely great group of people with an excellent track record supporting growth strategies.”

In addition to funding growth initiatives, the Seidler investment also ensures financial stability at a company with a complex employee ownership structure. Mardak and his wife Mary, who long managed the Business Affairs area of the company, had held a majority of the outstanding shares, with the balance owned by employees. Mardak explained, “It’s hard for me to believe that I’m 76. I still feel great, play handball weekly, and ride my bike 1,000 miles a year. But we needed to do some estate planning.” Selling shares to Seidler better positions the company for the long run.

Mardak says Seidler was attracted to Hal Leonard because of its consistently strong operating results and its growth potential. “Based on our market position in the U.S., they see substantial opportunities for expansion internationally, and we agree,” he said. “Also, there is untapped opportunity with our digital delivery systems.” Morton added, “Seidler brings skill to our board of directors, along with a nuanced understanding of our business.”

Hal Leonard’s engagement with Seidler began over two years ago, as the company was reviewing a strategic investment that would have required securing outside capital. The investment ultimately didn’t work out, but Mardak was impressed by the Seidler team and management approach, particularly their “partnership model” which aligns the interests of owners, managers, and employees. “Seidler brings skill to our board of directors, along with a nuanced understanding of our business,” he explained. “The success of Hal Leonard has been built by a cohesive team of incredibly talented and dedicated employees. Seidler really understood the value and importance of our people. Their style and culture is similar to our own, making it easy to welcome them to our team. With their participation, we will be better equipped to react to our ever-changing industry and accelerate some of our global and digital initiatives to take Hal Leonard to even greater heights.”

With more than $1.0 billion in assets under management, Seidler Equity Partners specializes in investing alongside owner operators. Portfolio companies include the LA Fitness chain of fitness centers, Aden and Anais, a maker of children’s clothing, Sportsman’s Warehouse, and Tomah, a specialty chemical company. As a matter of principle, Seidler consistently avoids heavy leverage in its portfolio companies, and leaves day-to-day decisions in the hands of experienced management.

Hal Leonard was founded in 1947 in Winona, Minnesota when Harold and Everett “Leonard” Edstrom and Roger Busdicker produced a marching band arrangement of the popular hit “I Wonder Who’s Kissing Her Now.” The three had previously fronted a dance band—dubbed the Hal Leonard band, because the Edstroms’ father didn’t want the family name associated with traveling musicians—and saw an opportunity in arranging hit songs for school ensembles. In 1950, they developed The Pointer System, a series of lesson books targeting the fast-growing home organ market.

When Keith Mardak joined the company in 1970, the Pointer System and Hal Leonard’s catalog of band and orchestral titles were generating revenues of $1.0 million. Hard driving and ambitious, Mardak dramatically expanded the company in 1980 with a complex deal that provided print rights to a vast Chappell catalog of popular music, including the works of Gershwin, Cole Porter, and countless others. Hit songs from the Chappell catalog, arranged for band, orchestra, choral, guitar, and keyboard, fueled rapid growth and by the mid-1980s, Hal Leonard had emerged as an industry leader. In 1985, as revenues passed the $14.0 million mark, Mardak teamed with a group of employees and acquired the company.

Over the past 30 years, Mardak and a talented team have built Hal Leonard into the world’s preeminent print publisher through a combination of strategic acquisitions and innovative product development. The company pioneered “multi-media” products, packaging print music with CDs, MIDI files, and, more recently, access to streaming downloads. With the establishment of Sheet Music Direct in 1997, Hal Leonard was also on the forefront of online sheet music delivery. The acquisition of G. Schirmer, Rubank, Willis, and Jensen Publications solidified the company’s leadership position. More recently, Hal Leonard has quietly emerged as an important m.i. distributor, representing Avid, PreSonus, Line 6, Samson, Tycoon, and numerous other product lines. For the most recent fiscal year, Hal Leonard had revenues of $175 million.

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