Vineyard Vines suitors balk on pre-IPO stake sale, sources say

Provided exclusively by Mergermarket

Potential investors in a pre-IPO fundraising round at Vineyard Vines have slowed down their pursuit of the preppy apparel retailer amid high valuation expectations, according to two sources briefed on the matter.

Stamford, Connecticut-based Vineyard Vines hired Goldman Sachs to sell a minority stake this spring, according to Reuters, which estimated the company has around USD 80m in EBITDA.

Vineyard Vines has sought an EBITDA multiple in the “mid-to-high teens,” a tough ask for many financial sponsors, one of the sources said. The talks have slowed considerably since mid-summer, this source said. The second source described the process as not advancing.

A spokesperson for Vineyard Vines declined to comment. Goldman Sachs also declined to comment.

Vineyard Vines, founded in 1998, cites its rapid retail growth and offerings for both men and women as a rationale for the high price tag, the first source briefed said. This source added that its business may have “softened” since the beginning of the process, adding to bidder hesitancy.

In 2011, company co-founder Ian Murray told Mergermarket he had no plans to bring on additional investors, despite a high level of interest. At the time, Vineyard Vines had around USD 100m in revenue. Ian Murray owns the company with his brother Shep Murray.

Vineyard Vines specializes in preppy East Coast-inspired clothing and accessories. A sector banker said potential private equity suitors could include Advent International, Bain Capital and Leonard Green & Partners.

Oxford Industries (NYSE:OXM), which owns brands with a similar preppy style, would likely be priced out of the deal, the banker said. Oxford acquired South Carolina-based apparel company Southern Tide in a USD 85m deal in April.

Menswear companies generally sell for about 8x EBITDA, and potentially as high as 10x if they are particularly attractive, a second sector banker said. Few private equity suitors would consider targets much more expensive than that, particularly for a non-controlling stake, this banker added.

by Nicholas Clayton and Anthony Valentino

As seen in the mergermarket newsletter on 25/08/2016

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s