In mid-January, the startup private equity firm Brand Velocity Partners made its first acquisition with the purchase of Original Footwear Inc., a provider of military and law enforcement footwear. The driving force behind the transaction was Steve Lebowitz, founding and managing partner at Brand Velocity Partners.
“We officially launched with the acquisition,” he said. “We had the idea last year and it started because my partners and I felt there was a real gap in the private equity marketplace. I spent my career in lower-middle markets private equity and a lot of private equity firms had very similar value-add strategies. The idea of our firm was to focus the value-add strategy on an area where they really need the help. Finance is not usually what these companies need.”
Lebowitz, who has a law degree from Harvard, was a managing partner at Topspin Partners for 16 years before teaming with three other private equity veterans in creating Brand Velocity Partners. He stressed that helping companies via marketing expertise will make Brand Velocity Partners stand out from other private equity firms.
“For a business owner that wants a second bite of the apple, that gives them something exciting for partnering with us,” he said. “We can really help you grow by marketing resource.”
With Original Footwear, Lebowitz learned about the company through an introduction via mutual connections.
“They weren’t in the auction process,” he added, thus giving him an inside track that other private equity firms lacked. “Our value add was appealing to the owners.”
Original Footwear was founded in 1999 and is based in Morristown, Tennessee. The company offers footwear products under the Altama, Original S.W.A.T. and Smith & Wesson brands and recently expanded into the consumer footwear market with Urban Assault, a lighter-weight variation on its Altama brand of military boots.
“They’re already growing their military and law enforcement channel,” Lebowitz observed. “We want to grow more broadly with consumers — and that does not mean for every consumer, because it may not be for every consumer. But we think there is an opportunity for the authenticity of the brand, having been on the soldiers in every war going back to Vietnam and the footwear of choice for Navy SEALs.”
For Lebowitz, Original Footwear met his criteria as a company marked with differentiation from its competitors.
“The product has to stand out in some way,” he stressed. “And if their financial plan makes sense, can we add value to it? We want to take that great product, figure out who the consumers are, and get the message and product to them.”
Lebowitz acknowledged that Brand Velocity Partners’ focus is different from other private equity firms that put their primary attention on the financial aspects of growing companies.
“There is a tremendous amount of capital that is not differentiated from one another,” he stated. “The whole model of private equity is ripe for change because I think it overrates financial skillsets and underrates other valuable skillsets. If you look at how great companies are built, they are not built on finance — but that’s how the industry is organized. I think that, over time, there will be more expertise in marketing or operational.”
However, he admits that marketing could use a bit of a shake-up.
“A lot of marketing is about figuring things out and not being dogmatic about a particular way,” he continued. “In our approach, we try different things. We did a bunch of research on the brand — 12,000 people — and tried to understand who would be more sympathetic or less. That was a lot of testing — almost like science. Science is more of a process of inductive reasoning to get to an answer, as opposed to a pre-defined answer we knew in advance. You have to find out not what you think, but what a much bigger group thinks. It’s natural to overestimate one’s prowess.”
Brand Velocity Partners has completed a second transaction that has yet to be formally announced. Lebowitz is not setting a quota for the new firm’s transaction activity, insisting that “quality is definitely more important than quantity — it has to be where the deal fits the criteria.”
Also on the agenda is a formal headquarters. Lebowitz envisioned a Greenwich office “eventually,” but at the moment he is working from a home office in his Larchmont residence.
“I like it — there is no commute time,” he laughed. “If you are working long hours, it is great to shave off an hour in commuting. I work on the third floor. I go upstairs and close the door so nobody bothers me.”