PE firm acquires Parfums de Coeur

Yellow Wood Partners L.L.P. on Sept. 5 announced the purchase of Darien-based Parfums de Coeur in an auction, marking the private equity firm”™s first major acquisition since establishing a $225 million fund in January.
Founded in 2009 with offices in Irvington, N.Y., and Boston, Yellow Wood bought the mass-market fragrance company, whose products include the brands Body Fantasies, Designer Imposters and BOD Man, from owner Mark Laracy for an undisclosed price.
Dana Schmaltz, a Yellow Wood founding partner, said Parfums de Coeur”™s growth prospects and strong shelf presence among major retail chains made it an ideal investment, given the private equity firm”™s emphasis on the consumer packaged goods industry.
“When we see a business that”™s growing very nicely that also has a very attractive consumer proposition, that”™s what got us excited,” he said.
After conducting market research and meeting with Laracy and Parfum de Coeur”™s management team, Schmaltz said Yellow Wood decided to participate in the auction. “We knew they were doing very good business at Walmart and we extrapolated that to the other retailers” Yellow Wood surveys, Schmaltz said. “We looked at the business, we liked the shelf space, we liked the product, and we thought the product had a very compelling proposition to consumers ”¦ Disposable income being what it is, this product is very compelling to those lower-income consumers.”
Global investment bank Houlihan Lokey acted as exclusive financial advisor to Parfums de Coeur, with Seward & Kissel L.L.P. serving as the fragrance company”™s legal counsel. Fried, Frank, Harris, Shriver & Jacobson L.L.P. served as legal counsel for Yellow Wood.
The current management team will remain in place at Parfums de Coeur, with Yellow Wood founding partner Peter Mann named chairman.
Yellow Wood was formed by Mann, former chairman and CEO of Irvington-based consumer products company Prestige Brands Holdings Inc., and Schmaltz, who was previously president of Boston private equity firm J.W. Childs Associates L.P., with the goal of “taking the road less traveled in private equity.”
“The difference is really how we set it up. We”™re a private equity firm but we”™re composed mainly of operating executives. It”™s not just composed of CEOs” and other C-level executives, Schmaltz said, but of sales, marketing, finance and logistics veterans. “We think our biggest differentiator is we bring that functional expertise to the diligence process.”
After acquiring companies, Schmaltz said, “We can help their management teams in those specific functions.”
In the case of Parfums de Coeur, Yellow Wood hopes to work with the current management team to expand sales beyond the U.S. to Mexico and Canada, while also boosting marketing efforts and improving supply-side logistics, Schmaltz said.
Yellow Wood”™s portfolio previously included Blacksmith Brands Inc., which it formed in 2009 with the purchase of five brands from Johnson & Johnson and which was sold in 2010 to Prestige Brands after achieving roughly 50 percent sales growth.
With fundraising for a $225 million pool concluding earlier in 2012, Yellow Wood hopes to make investments ranging from $10 million to $80 million in consumer products brands or companies.
The fund, which includes five investors, will allow Yellow Wood to acquire businesses with a combined enterprise value of about $1 billion over the next three to five years, the company said.
Schmaltz said Yellow Wood hopes to grow Parfums de Coeur through generic sales as well as through acquisitions.
Other areas the company is exploring include the over-the-counter drug industry, the vitamin and minerals supplements sector, and the packaged foods business, he said.