Win Brands considering raising capital to support direct-to-consumer rollup, CEO says

Provided by Mergermarket

Win Brands Group, a privately held direct-to-consumer brands platform, is about to disclose its fifth acquisition in two years and its second one within the last month, said CEO Kyle Widrick.

New York-based Win Brands is “aggressively consolidating the direct-to-consumer arena” with an aim to purchase more than 20 businesses within five years, Widrick said. Meanwhile, the company is in discussions to raise up to USD 100m from financial sponsors, family offices and strategics that have recently approached the company, the CEO noted.

The company is not working with an investment bank on the potential capital raise.

Proceeds from a financing round would support organic and inorganic growth over the next five years, at which point the company will likely explore a sale to a large private equity firm or an IPO, Widrick said. It is possible Win Brands could be in the ballpark of USD 500m in revenue at that time, he added.

Win Brands projects 2019 revenue of roughly USD 40m, without including the latest acquisition. That deal will put sales well north of USD 50m, according to Widrick. Win Brands is profitable and has raised just shy of USD 10m in three rounds of funding mainly from individual investors, including veteran fashion retail player Chris Burch, and Kim Perell, CEO of Amobee.

On 6 November, Win Brands announced its acquisition of custom t-shirt retailer Bow & Drape, whose clients include tennis champion Serena Williams and actress Reese Witherspoon. Its latest deal, for an accessories brand focused on the active and sports lifestyle, closed last month and will be formally announced in the next couple of weeks. The US-based target, with significant operations in Australia, has generated more than USD 150m in revenue since its founding seven years ago, according to Widrick. Its products are sold at major retailers including Target, Dick’s Sporting Goods and REI.

Win Brands currently owns six brands, including Bow & Drape, Homesick Candles and Stowaway Cosmetics. Four of them were acquired.

The company’s ideal acquisitions are consumer lifestyle brands with between USD 5m and USD 50m in revenue, though it would consider larger deals, Widrick said.

Win Brands is seeking products that cost less than USD 150. It is not interested in medically related or “complicated” products, or high-fashion items, Widrick said. Ideal targets are “good companies with good products but that lack the necessary operational efficiencies to scale.”

Widrick said Win Brands typically pays between 0.25 and 0.75 trailing 12-month revenue, or roughly 5x EBITDA, with the expectation to build valuation to more than 2x the next 12 month’s revenue.

Widrick, 36, and Taylor Sicard, who is in his early 30s, co-founded Win Brands in 2017.

The company has four main sales channels: its own websites; Amazon.com; large retailers such as Saks Fifth Avenue, Bloomingdales and Macy’s; and small and medium-sized businesses, which it targets largely by using online wholesale marketplace, Faire.com.

Widrick noted that Homesick Candles has good traction in Canada and the UK, and that Win Brands will look to sell internationally across all of its brands next year.

Last week, Win Brands announced that Homesick Candles had partnered with Dunkin’ Donuts to launch three limited-edition candles with coffee scents Original Blend and Peppermint Mocha and a third scent of Old-Fashioned Donuts.

Win Brands’ peers include RRE Ventures-backed Pattern Brands and privately held Brandable, according to Widrick.

When asked about recent activity in the space, the CEO pointed to Authentic Brands Group, which announced a USD 875m investment from BlackRock in August, and Mohawk Group Holdings [NASDAQ:MWK], which completed a USD 29.3m IPO in June.

Win Brands has 15 employees and an additional office in Ottawa, where it houses several employees that previously worked at Shopify, Widrick said.

The company uses law firm Robinson Brog and accounting firm Sklar Kantor Block. Accounting firm Marcum assisted on its most recent buy.

Widrick, a former venture capitalist, previously co-founded digital design, development and marketing agency Brand Value Accelerator, which was acquired five years later at roughly USD 10m in revenue by New York-based family office, August Spark.

by Deborah Balshem in Fort Lauderdale

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