Etsy Sells Reverb Ahead Of Q1 2025 Earnings Report
Etsy has announced they are divesting another part of their "House of Brands" as musical instrument marketplace Reverb is sold to Servco Pacific Inc and Creator Partners LLC.
The news was revealed in an 8-K filed with the SEC today and comes just one week ahead of Etsy's Q1 earnings report, likely in an attempt to boost investor sentiment about the company's financial future - though details of the transaction have yet to be disclosed.
On April 21, 2025, Etsy, Inc. (“Etsy”) entered into an agreement to sell Reverb Holdings, Inc. (“Reverb”), its musical instrument marketplace, to Reverb IntermediateCo LLC, a Delaware limited liability company and wholly owned subsidiary of Reverb Partners LLC, a Delaware limited liability company.
Reverb Partners LLC is an affiliate of Servco Pacific Inc., a Hawaii corporation, and Creator Partners LLC, a Delaware limited liability company (collectively, the “Acquirors”). The Acquirors share Reverb’s experience in the music industry and focus on supporting musicians.
Etsy has decided to divest Reverb from its portfolio to focus on driving growth in the core Etsy marketplace, as well as its subsidiary Depop. The transaction is currently expected to close in the coming months. Additional information will be provided in Etsy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
Etsy's decision to divest Reverb comes as no surprise as the marketplace has struggled to produce results over recent quarters while facing activist investor pressure from Elliott Management, which famously also pressured eBay to spin off business units that were either underperforming or not aligned with the core marketplace business.
The writing was on the wall with significant layoffs at Reverb in September 2024 and the departure of Chief Product Officer Bradford Shellhammer in October.
Liz Morton
A blog post on the Reverb site CEO David Mandelbrot sought to quell any buyer, seller or employee concern, saying the Reverb team will remain intact and buying and selling on the site will continue as usual without any disruption.
Today, I’m excited to share that two new investors—Creator Partners and Servco—have entered an agreement to purchase Reverb from Etsy.
Once the deal closes, we’ll be a privately-held, independently operated company backed by two investors who bring a passion for the musical instrument industry as well as a community-first approach and a deep desire to help transform creative industries for the better...
...When this deal is complete in the coming weeks, we’ll return to operating as a standalone business. We won’t be merging with either investor, or any of the other companies in their portfolios, and our team will remain intact.
In short, you can continue buying and selling on Reverb as you normally would without any disruption.
That said, we hope you do notice positive changes as we continue to focus on making Reverb the best place to buy and sell music gear. Here’s just a sampling of what we’ve already got in the works:
- We’ve been working to make more music-making software available on Reverb so you can change up your sound, even if you’re limited on space or money.
- We’re getting ready to pilot a new option for selling that allows you to get paid faster and drop off your gear locally, without needing to create a listing or ship.
- We’ve got teams working on making it easier to find what you’re looking for on Reverb, ship your items safely, and resolve your support issues quickly.
Mandelbrot also said he believes these investors or a great fit to take Reverb private, with Creator Partners having current music investments in BMI, SoundCloud, Colors+Studios and Mogul and Servco's involvement in the musical instrument industry since 1937, including a long history with Fender—first as a dealer in the 1950s and now as the majority owner of the company.
The timing of this move also comes as no surprise as Etsy previously divested Brazilian marketplace Elo7 in 2023 in a similar effort to gain a pre-earnings stock price bump.
Stay tuned for updates in this developing story!
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