Case Study

Overview

• Formation Brands is a leading designer and marketer of on-trend housewares and beverage containers, across a variety of form factors and materials including ceramic mugs, acrylic tumblers and glassware, encompassing both private label, white label and trade brand products
• The company sells into mass market retail and independent gift channels and is also a key strategic merchandise vendor to Starbucks
• The company was sustaining 20%+ annual revenue growth with significant operating cash flow

Situation

• Formation was controlled by an operationally-oriented private equity firm which during its ownership tenure successfully institutionalized processes to stimulate top and bottom-line growth
• The company’s founders were active in senior leadership roles and wanted to stay with the business to continue its growth trajectory, but also desired a significant amount of liquidity from a transaction
• The company was subject to a complex equity waterfall, complicating traditional buyout scenarios

Cascadia Process

• Cascadia ran a broad auction process to uncover the entire range of liquidity options available to the stakeholders and recevied a number of offers for the business from financial buyers
• Cascadia recommended that the owners not pursue the financial offers, which we felt did not recognize the full value of the company, in favor of waiting for improved financial performance and strategic counterparty
• Leveraging relationship with PMI and Endeavour, Cascadia brokered a 100% sale of Formation at a significant premium compared to offers received the prior year
• The transaction increased realized proceeds to the sellers by 60% relative to previous offers, without overleveraging the acquirer’s balance sheet, setting the combined company up for continued success in the future