I have been an owner/operator of clothing and eyewear brands over the last 7 years. Our brand growth has stalled out and my partners (Family office) asked me back in October to look at new ways to jump start the company. FYI, we are based in Spain.
Our original idea was to start with a roll-up strategy and offer stock for stock mergers with several brands to build up a larger holding company. After doing some outreach and lots of cold calling we received soft commitments from 6 brands, it would total about 18€ million in sales, 2€ million EBITDA. From there we could probably do more bolt ons, and buy up some licensed brands. Ideally build up a holding company and attract an operational buyer or investor later on.
One issue is the original brand portfolio will be very diverse (nobody is really competing) but will have very little overlap in production or sales strategy. We would only be able to consolidate logistics and admin to start probably.
I have reached a cross roads. I was not familiar with the Independent sponsor model when we started, but I am enjoying the work. I am now convinced I could get deals done with this structure, but have my doubts about the current deal/industry we are working on.
Should we make a partial cash deal for one of the bigger brands ~4€ million in sales (40% growth YoY), they want 7€ million but would probably negotiate down due to fears in the new economy. and use that as the ship to then acquire others?
Is this current structure doomed to fail, and doing stock for stock is a recipe for disaster.
With the turbulent economy many companies are willing to negotiate right now, make the deal and figure it out later.
One of the models I was following is MBH Corporation that started trading in Frankfurt last year.