Loyal readers of this column know that from time to time we like to highlight specific deals that have recently closed. We do this when the completed transaction has some specific features that you might find of interest.
In this case, the deal that caught our attention was the announcement last month that Boot Barn acquired RCC Western Stores (RCC). The deal included not only RCC’s 29 retail locations but also its website and brand.
The synergies of the deal are clearly apparent. Boot Barn’s retail operations are located largely in the western half of the U.S., and RCC has a strong retail presence in the Midwest and the South. Combining Boot Barn’s 85 locations with RCC’s 29 now creates, according to the press release, “the largest specialty retailer in the industry, with stores coast-to-coast.”
The transaction was announced on Aug. 8, 2012. The most interesting facet of this deal though is that Boot Barn was itself acquired by Freeman Spogli & Co., a leading middle-market private equity firm, in December of 2011.
This is how Brad Brutocao, General Partner of Freeman Spogli, described the transaction last December:
"Patrick Meany and the entire Boot Barn team have done a fantastic job establishing Boot Barn as the leading destination for authentic western and work wear. Boot Barn's customers value the company's broad selection, strong customer service and convenient shopping options both in stores and online. We are pleased to become a long-term investor in the company and look forward to helping Boot Barn continue its growth."
I highlighted the last segment of that paragraph on purpose. We are hearing lots of noise right now about how evil equity firms are and how they acquire companies simply to saddle them with loads of debt and/or sell off the assets.
Although some equity firms that specialize in billion-dollar deals have learned the hard way how excessive debt can destroy a great investment, firms that specialize in the middle-market, like Freeman Spogli, acquire companies to help them grow.
They don’t do this for altruistic reasons. Their focus is on generating an ample return for their investors. And the best way to do this is to acquire a platform company like Boot Barn and then “add on” to it by making additional synergistic acquisitions during the ensuing years.
Hundreds, if not thousands of equity firms located in North America are using this strategy today. Quite often, because of the relatively small size of the deals, most of these transactions fly under the radar.
In fact, there are probably equity firms creating platforms in your industry right now, and you are unaware of it!
There is one more point that we would like to make about the Freeman Spogli acquisition of Boot Barn. According to the press release at the time:
“The existing management team, led by Patrick Meany, will continue to manage and operate the business.”
What does this mean? It tells us that Boot Barn’s existing ownership and management team participated in this sale by retaining a partial interest in the business. This will allow them to participate in a secondary liquidity event when the new, larger entity is sold or taken public in a few years.
This creates a win-win for both the equity firm and the management of Boot Barn. Freeman Spogli gets access to industry experts to grow the business and Boot Barn gains a financial and marketing partner to help it grow and achieve its goals.
Again, this is just one example in one industry of this in action. Generational Equity is in contact with hundreds of buyers across North America that are exercising the same roll-up, add-on strategy. It most likely is occurring at some level in your industry.
If you have great ideas on how to grow your business but lack the capital and the financial know-how to achieve them, you should attend one of Generational Equity’s no-obligation M&A workshops. While there you will learn about how you too can effectively manage your M&A process and find optimal buyers for your business.
No matter what, if you need investment partners, keep equity firms in mind. They have capital to burn and are pursuing add-on acquisitions like never before. In fact, according to many estimates, nearly half of all acquisitions now completed by equity firms are add-ons. So keep that in mind as you look at your expansion plans.
© 2012 Generational Equity, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
By submitting my name electronically and clicking the “submit” button, I understand that I am providing Generational Group, Inc., Generational Equity, LLC, Generational Capital Markets, LLC, DealForce LLC, their affiliates, representatives, contractors, etc. (“Generational Group”) my telephone number, which may include a number that is wireless and/or a number that is on a national, state, or other Do Not Call registry or list. I hereby consent and agree to receive telephone calls including any autodialed and/or pre-recorded telemarketing calls and/or text messages (telemarketing) from or on behalf of Generational Group at the telephone number provided. I further consent and agree that telephone calls may be made using automated technology such as an automatic telephone dialing system, artificial or prerecorded voice, or SMS text messaging. Consent is not a condition of purchase. I further warrant and represent that any telephone number provided is not on any state or national Do Not Call Registry and that by agreeing to these terms and conditions that if any number provided is on any such registry, I hereby consent and agree to receive telemarking calls and/or communications including any phone calls, text messages, URLs, links, emails, etc. to the telephone number(s) and/or any e-mail addresses provided. I understand that by entering my name in the electronic form provided, that I am signing my name as equally as if it was my handwritten signature and that it is my intent to provide an “electronic signature” as that term is defined in state and federal law, as well as industry practices for e-commerce.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Success, you have been added to our list.
it all started with a conference.
start your story today,
speak directly with one of our senior advisors +1-972-232-1121