Recommended
More Related Content
What's hot
What's hot (20)
Similar to CCP HoldCo acquisition strategy
Similar to CCP HoldCo acquisition strategy (20)
CCP HoldCo acquisition strategy
- 1. HoldCo Chapman Capital Partners, Inc. Friday February 6, 2009
- 2. Agenda © 2009 CCP, Inc. Confidential Information CCP History & Select Transactions Opportunity & Strategy Financial Summary & Valuations Available Alternatives Discussion 1
- 3. CCP History © 2009 CCP, Inc. Confidential Information Chapman Capital Partners is an international investment banking firm specializing in mergers & acquisitions, financing, and advisory services.CCP focuses on companies with enterprise values ranging from $250 million to $750 million in the following industries: Apparel, Publishing, Entertainment, Media & Technology.The firm is represented by Baker & McKenzie and Locke Lord Bissell & Liddell, and has offices in North America, Asia, and Europe. 2
- 4. Select Transactions © 2009 CCP, Inc. Confidential Information 3
- 5. CCP Executive Management © 2009 CCP, Inc. Confidential Information Cheng Dao Email: chengwdao@yahoo.comManaging Partner Phone: 951-367-5583 Gus LeañoEmail: gusleano@gmail.comManaging Partner Phone: 714-514-4891 Jeremiah Locanas Email: jablocanas@gmail.comManaging Partner Phone: 512-560-0497 4
- 6. HoldCo Opportunity 5 © 2009 CCP, Inc. Confidential Information
- 7. Strategy – Key Factors 6 Innovation & Synergies New Business Opportunities © 2009 CCP, Inc. Confidential Information Mid-Long Term Growth Maximize Shareholder Value 10 Year Plan Exit Opportunities
- 8. Strategy - Recommendation 7 © 2009 CCP, Inc. Confidential Information Acquire/Merge FashionCo & ApparelCo 40 Years of Management Experience Distribution Channels Increased Revenue (ApparelCo) Established Consumer Brand Streamline Operations (SGA, Outsource Mfg) Develop EntCo 2.0 Monetize Website & Production Facility Create Web 2.0 Infrastructure Transition Print to Content & Online Services Strategic Returns in 3-5 Years 4th Brand – Culture/Lifestyle Based Products Premium Design at Affordable Prices
- 9. 3x3 10 Year Plan 8 © 2009 CCP, Inc. Confidential Information EntCoPrint-based Brand ApparelCoPremium Brand FashionCoPrice-based Brand Current + 1-3 YearsMerge AC & FCMaintain 3 Brands Develop Web 2.0Increase FemaleDemographic IncreaseDistribution Maintain OpsDevelop 4th BrandCulture/Lifestyle 3-8 YearsEconomy Picks upTransition Customers Transition Printto Online Services Maintain IncreasedAwareness &Market Share Release4thBrandUpsell/ReplaceFC Brand 8-10 YearsMultiple Exit StrategiesReinforced Strategy Web 2.0 Premium Brand Medium Brand Phase out PrintSell Hard Assets Sell/Phase outFC Brand + Revenue -- OpEx + OpEx
- 10. Financial Summary © 2009 CCP, Inc. Confidential Information Valuations: FashionCo Bid Range: $70.88-101.7M Valuation Premium/Discount: 20% Owners looking for $85M Owners not enamored with Apparel Industry 9 ApparelCo $97.3-120.1M8.3-10.3X$41.5-51.2M FashionCo $124.8-143.2M7.6-8.7X$88.6-101.7M FashionApparelCo $210.1-244.8M6.8-7.5X$120.4-140.3M Total Ent Value: Multiple: Equity Value:
- 11. Financial Details © 2009 CCP, Inc. Confidential Information FashionApparelCo Assumptions: 2% Terminal Growth Rate 10% Reduced OpEx Valuation Factors: 10
- 12. Available Alternatives © 2009 CCP, Inc. Confidential Information Pacify vocal Hedge Funds Only 2 Analysts cover HoldCo (Minimal Impact) + PR: Growth Strategy & Hedge Fund Performance -- Offer Board Seat to Hedge Funds Sell EntCo -- Minimal Long-Term growth w/o Investment -- “Core Business”, Loss of Stable Revenue + Breakup value is conservative + Print is being replaced by the Internet + Industry is currently conducive to Consolidation 11
- 13. Available Alternatives © 2009 CCP, Inc. Confidential Information Sell ApparelCo, Buy FashionCo -- No Competitive Advantage -- Trading Premium Brand for Commodity + Better Distribution Sell ApparelCo, Keep EntCo + Higher sale multiple (Trendier Brand, > $45M) + Focus on Core Competency + Removes Family/Board influence -- Volatility from smaller entity (Scale, Size) -- Losing outlet to reach Women (EntCo) -- Resistance from Family 12
- 14. Strategy - Recommendation 13 © 2009 CCP, Inc. Confidential Information Acquire/Merge FashionCo & ApparelCo 40 Years of Management Experience Distribution Channels Increased Revenue (ApparelCo) Established Consumer Brand Streamline Operations (SGA, Outsource Mfg) Develop EntCo 2.0 Monetize Website & Production Facility Create Web 2.0 Infrastructure Transition Print to Content & Online Services Strategic Returns in 3-5 Years 4th Brand – Culture/Lifestyle Based Products Premium Design at Affordable Prices
- 15. Discussion 14 © 2009 CCP, Inc. Confidential Information
- 16. Backup © 2009 CCP, Inc. Confidential Information Recommended Strategy – Details Recommended Strategy – Potential Issues Valuations Discounted Cash Flow Analysis Comparable Companies Analysis Recent Transactions Analysis Financials Income Statements (Historical & Projected) Balance Sheets (Historical) 15
- 17. Strategy - Details 16 © 2009 CCP, Inc. Confidential Information 4th Brand – Affordable Premium Designs Trendy Brand < Impact to Economic Downturns Increased Revenue / Unit Culture/Lifestyle Based IKEA, Target Patagonia, WholeFoods Disney, Apple, Samsung, Vizio Vans, Quiksilver, And1, Volcom, NoFear, Hello Kitty, Adidas, Paul Frank Reinforced Marketing via EntCo 2.0 Viral, End-to-End Customer Experience Increased Global Focus
- 18. Strategy - Details 17 © 2009 CCP, Inc. Confidential Information EntCo 2.0 Text & Video - Reviews and Tutorials Personality Blogs Customer Forums - Opinions/Ratings Additional Revenue Streams: Advertisements Provide EntCo content/reviews to other sites Partner with Online Marketplace Premium Service & Content for registered users
- 19. Strategy – Potential Issues 18 © 2009 CCP, Inc. Confidential Information Waterdown effect on ApparelCo Brand Acquiring FashionCo for Brand/Distribution only Not effective as Economic hedge Budget customers don’t buy in Economic Downturn No competitive advantage, Price Only Additional Risk Won’t have immediate returns (Recession) Volatility – Fashion trends change constantly
- 20. Valuations 19 © 2009 CCP, Inc. Confidential Information Discounted Cash Flow Analysis ApparelCo FashionCo Merged ApparelCo & FashionCo
- 21. 20 © 2009 CCP, Inc. Confidential Information ** ApparelCo Discounted Cash Flow Analysis < Min Max >
- 22. 21 © 2009 CCP, Inc. Confidential Information ** FashionCo Discounted Cash Flow Analysis < Min Max >
- 23. 22 © 2009 CCP, Inc. Confidential Information ** ApparelCo & FashionCo Discounted Cash Flow Analysis
- 24. Valuations 23 © 2009 CCP, Inc. Confidential Information Comparable Companies Analysis ApparelCo FashionCo
- 25. 24 © 2009 CCP, Inc. Confidential Information ** ApparelCo Comparable Companies Analysis
- 26. 25 © 2009 CCP, Inc. Confidential Information ** FashionCo Comparable Companies Analysis
- 27. Valuations 26 © 2009 CCP, Inc. Confidential Information Recent Transactions Analysis ApparelCo FashionCo
- 28. 27 © 2009 CCP, Inc. Confidential Information ** ApparelCo Recent Transactions Analysis
- 29. 28 © 2009 CCP, Inc. Confidential Information ** FashionCo Recent Transactions Analysis
- 30. Financials 29 © 2009 CCP, Inc. Confidential Information Income Statements (Historical & Projected) EntCo ApparelCo FashionCo
- 31. 30 © 2009 CCP, Inc. Confidential Information ** EntCo Income Statement
- 32. 31 © 2009 CCP, Inc. Confidential Information ** ApparelCo Income Statement
- 33. 32 © 2009 CCP, Inc. Confidential Information ** FashionCo Income Statement
- 34. Financials 33 © 2009 CCP, Inc. Confidential Information Balance Sheets (Historical) EntCo ApparelCo FashionCo
- 35. 34 © 2009 CCP, Inc. Confidential Information ** EntCo Balance Sheet
- 36. 35 © 2009 CCP, Inc. Confidential Information ** ApparelCo Balance Sheet
- 37. 36 © 2009 CCP, Inc. Confidential Information ** FashionCo Balance Sheet
Editor's Notes
- Based on the information you’ve provided, there are 3 main opportunities you’ve focused on…
- Those 3 opportunities, however, reflect an underlying need to maximize your existing assets. - By innovating and creating synergies between your two business units that complement & reinforce each other, you create new business opportunities. - New business opportunities fuels additional revenue streams that enables long term growth and maximizes shareholder value. - Our recommendation is based on a 10 year plan that also enables additional exit opportunities.
- Acquiring and Merging FC and AC results in 4 immediate benefits… Side benefit is it pacifies the vocal Hedge Fund, but merging is not to simply satisfy the Hedge Fund Too costly to offer a board seat just to pacify underperforming Hedge FundInvesting in and developing EntCo is part of the larger 10 year plan to innovate and create synergies between the two business units. Web 2.0 -- Leverage existing customer base and EntCo Brand
- Acquiring and Merging FC and AC results in 4 immediate benefits… Side benefit is it pacifies the vocal Hedge Fund, but merging is not to simply satisfy the Hedge Fund Too costly to offer a board seat just to pacify underperforming Hedge FundInvesting in and developing EntCo is part of the larger 10 year plan to innovate and create synergies between the two business units. Web 2.0 -- Leverage existing customer base and EntCo Brand
- Premium Service & Content: - Special Discounts to Online Marketplace - Customer-based Marketplace for Used Goods - Additional Distribution Channels (Cell Phones)