The story of a theater seat manufacturer in North Mississippi says a lot about how both corporate finance and consumer tastes are changing rapidly.
In 2012, VIP Cinema Seating opened a plant in New Albany. It started with 30 employees but grew into one with more than 500. It’s the kind of small-business-turns-into-big-business success story of which every community in Mississippi dreams.
Ultimately, the owners cashed in by selling the company to a private equity group. But the new owners filed for bankruptcy protection in February — before the coronavirus pandemic took hold.
Enter the prior owners, who along with two other investors bought most of the bankrupt company’s assets and now stand ready to reopen the factory, under a new name, with 100 employees.
Smart people run private equity companies, and often do quite well. But in this particular case, even with a strong economy, they failed.
Perhaps the company sank into bankruptcy because of the changing tastes of the viewing public. In just the last few years, more people have installed extra-large, high-definition television sets in their homes. These TVs present a reasonable alternative to the theater experience, and if there is less use of movie theaters, there obviously will be less demand for theater seating.
Presumably the original owners have ideas about how to successfully pivot the business. We hope so.