April 25th, 2008

Dakota Arms Acquires New Equity Investors

Dakota Arms, LLC, an American manufacturer of custom sporting arms and components, has acquired equity financing which will provide additional capital for day-to-day operations. An investor group led by Patrick Gilligan, avid sportsman and former Chairman of the Board of the Rocky Mountain Elk Foundation, will receive shares of Dakota Arms, LLC and two seats on the Dakota Board of Directors as a result of its investment. Gilligan, who will play an active role in the strategic direction of the company, will become the new Chairman of the Board.

New Cash Keeps Dakota in Business
Cash from the new investments will be used to expand production levels and speed up the delivery of current customer orders. “This new cash commitment validates the strength of the Dakota Arms brand in the market,” said Patrick Franklin, Chief Operating Officer and Senior Vice President of Dakota.

The Dakota Business Model–Can It Work?
Dakota Arms has tried to establish itself as a high-end maker of hunting, sporting, and tactical rifles. The Dakota brands include Nesika, Miller Arms and Dan Walter Cases. Dakota has had trouble finding a place for itself in the market. It sells rifles that are substantially more expensive than Savages or Remingtons, but it has not been able to convince gun buyers that a Dakota Arms rifle is worth two to three times the cost of other brands.

Dakota hoped to follow the model of the high-end shotgun makers like Perazzi, but it is unclear whether that strategy will really work. Rifle shooters who want the highest levels of accuracy (and craftsmanship) have traditionally turned to small custom builders. Dakota has not, so far, really been able to establish its products as a viable alternative to the hand-built custom rifle. In a nutshell, shooters are telling us “For the money Dakota wants, I can have a custom built. And for less money, I can get a Cooper which offers guaranteed accuracy, and better customer service.”

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