What is the deal?
It was the sale of Broadlake’s majority stake in Northern Ireland-headquartered skincare and self-tan brand Vita Liberata to US pharmaceutical company Crown Laboratories at the end of 2017. We had invested in Vita Liberata in 2012 to accelerate the international growth of the business, supporting its expansion into the North American market.
Who were the advisers?
EY in Belfast was the financial and tax adviser to Broadlake and Vita Liberata. Tughans acted as legal adviser. The Sage Group, a Los Angeles-based investment bank that specialises in beauty M&A, was engaged to run what was a very smooth sale process.
How important were local advisers?
Tughans had been the company’s lawyers since 2011 and understood it well. They also had extensive experience of US acquisitions of Northern Ireland businesses. The EY financial due diligence team in Belfast had an excellent reputation in providing vendor due diligence (VDD) reports, which proved invaluable for a smooth sales process. Local advisers were key to the transaction, as they understood the company, the management team and the journey the company had been on.
What were the timescales?
We decided with the Vita Liberata management team in early 2016 that the time was right to look for a new partner. The company had shown strong growth in the US market since 2013.
By 2016, more than 50% of its sales were through US retailers such as Ulta, Sephora, QVC and Amazon. At the start of 2017, various workstreams were mobilised. An information memorandum was prepared, together with a historic and forward-looking financial model. The sale strategy was to focus on the US market exclusively, targeting international beauty trade players and US private equity groups specialising in the sector. EY prepared VDD and tax reports during this period and potential investors or acquirers were approached. Following management meetings and offers, exclusivity was granted to Crown in early Q3 2017. The transaction closed in December 2017.
And the strategy of the acquirer?
Crown used Vita Liberata’s premium brand and channel relationships in the US and Europe to cross-sell its own products, and sold Vita Liberata’s range through its own North American sales channels. In addition to sale synergies, there were also significant operational synergies and direct cost savings.
What were the challenges?
When engaging in a process like this, you are always mindful of the distraction this can cause to a management team trying to run the business. The advisers and Broadlake provided hands-on support throughout to avoid this happening. Selling a premium brand with such an international footprint to international trade and private equity involves working across different currencies, continents and time zones, and is always a challenge. Co-ordinating the due diligence process and arranging management meetings in the US with interested parties was a logistical challenge, but one we overcame.
The CV: Tom Smyth
Tom Smyth started his career with L’Oreal in London before moving to international staffing group SThree. After completing an MBA at Oxford University, he moved to M3 Capital Partners (formerly Macquarie Capital Partners) specialising in strategic corporate finance advisory and capital raising. Tom joined Broadlake in 2009 and is head of growth, focusing on sales and growth-based initiatives with the group’s portfolio of investee companies.
Recent deals
- Sale of Vita Liberata to Crown Laboratories in 2017
- Sale of Merlyn Industries to Norcros in 2017
- Investment in TTM Healthcare & Resilience in 2015
Originally published in Corporate Financier magazine in February 2020.
