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In a shocking move, QA1 is acquiring the assets of Detroit Speed & Engineering from Holley Performance Brands to grab an even larger piece of the pro touring and muscle car suspension market.
What does this mean for QA1 and DSE?
According to the press release, the deal is being finalized over the remainder of the year. Most likely, there are some undisclosed terms during the transition such as maintaining existing spending and not making any major, long-term investments. So for the immediate future, you can expect little to change.
But in the long term, QA1 is clearly looking to add product lines that go even further than the truck kits they developed in-house over the last two years, and acquiring DSE really jumpstarts that process.
“We’ve been continually impressed by the innovation and quality of their products, and we’re excited for what the future holds,” stated Melissa Scoles, CEO at QA1.
That said, if you are happy with QA1’s manufacturing capability, their customer service and drive for innovation, then you are going to view this as a win for DSE and its products that can live on and be produced at the highest level – which is my personal take on it. It’s incredible to think QA1, Speedtech, and DSE will all be under one umbrella. Each is an incredible brand on its own, with loyal fans. Scoles appears to have very clear vision of the type of company she wants to build and its coming together before our eyes.
Why did Holley sell DSE?
It’s no secret that Holley’s (NYSE: HLLY) stock price took a huge fall starting in July 2022, and has again taken a tumble – falling below $3 a share. If you recall, Holley was on a rapid growth tract when PE firm Sentinel Capital Partners combined forces with a few other PE firms and utilized a special purpose acquisition company (SPAC) to take Holley public. Being a publicly traded company certainly has its benefits – resources thanks to all that money coming in from would-be investors – and drawbacks – the pressure to deliver on that investment in the short-term, not just the long-term.
We continue to take steps at Holley Performance Brands to position our brands for long-term growth and success –Matthew Stevenson, President & CEO of Holley Performance Brands
If you read between the lines on Holley President Matthew Stevenson’s quote in the press release, jettisoning DSE strengthened its other brands. The conclusion I am drawing with this is that Holley grew too big and too fast for its own good. Without DSE in the mix, Holley can focus on what it does best.
Is this good for the industry and consumers?
If a PE-backed business grew too large to the point of potentially devaluing a well-established brand, then yes this is great for the industry and consumer when it gets rightsized and that brand can go to a smaller, more specialized company that can better nurture its existence. Meanwhile, one of the largest players in the industry devotes its resources to the other products it sees as being crucial to its existence…
Q&A with Melissa Scoles, CEO at QA1
SM: What motivated the acquisition of Detroit Speed?
QA1: The addition of Detroit Speed enhances our product lineup, engineering capabilities, and market presence. Together, with QA1 and Speedtech Performance, we are establishing a powerhouse of suspension and chassis solutions. This integration reinforces QA1’s position as the premier source for performance suspension across multiple markets. We are dedicated to building one of the most versatile suspension and chassis teams in the industry, committed to excellence and leading the way in performance innovation.
SM: What are your intentions for manufacturing and staffing?
QA1: We are excited to announce the addition of a third location to QA1’s design and manufacturing capabilities. The talented team at Detroit Speed will remain in place after the acquisition closes at the end of the year. The opportunity to utilize their award-winning build shop will significantly enhance our market impact moving forward.
SM: What impact do you foresee on your customers with the acquisition?
QA1: While we intend to promote each brand independently, many of our customers will benefit from having a single source for multiple high-performance suspension and chassis options.
QA1 is excited to announce that it has entered into an agreement with Holley Performance Brands (Holley) to acquire the assets of Detroit Speed & Engineering (Detroit Speed) in Mooresville, NC. This addition aligns with QA1’s mission to deliver high-performance suspension and chassis solutions, elevating its premium offerings and enhancing support for builders throughout the performance industry.
“QA1 is thrilled to welcome the Detroit Speed team,” says Melissa Scoles, QA1’s CEO.
“We’ve been continually impressed by the innovation and quality of their products, and we’re excited for what the future holds.”
“We continue to take steps at Holley Performance Brands to position our brands for long-term growth and success,” said Matthew Stevenson, President and Chief Executive Officer, Holley Performance Brands. “QA1 is the right strategic partner to take Detroit Speed to the next level and we look forward to seeing what these two businesses accomplish together as one team.” QA1 and Holley are dedicated to ensuring a smooth transition for all stakeholders.
Operations of Detroit Speed will continue in Mooresville, NC. More details will be announced upon the deal closing, which is anticipated at year end.
