What's the recipe for success investing in the retail and consumer sectors? Join us for a live discussion and Q&A session with Andrew Heyer, whose investment portfolio includes brands like Jamba Juice, Celestial Seasonings and XpresSpa. He will join OurCrowd's Principal David Stark and Head of Investment Community Zack Miller for a lively discussion and Q&A session.
2. Mistral Equity Partners
Executive Summary
Mistral Equity Partners was founded in 2007 to make control-oriented buyout and growth
equity investments in lower middle market companies in the consumer industry
Differentiated investment strategy has successfully combined the experience and networks of the
Investment Team and Management Board
Thematic approach, focusing on businesses benefiting from changing consumer
demographics and psychographics
Flexible transaction structures to enhance risk-reward profile of investments
Advantaged transaction origination and due diligence
Unique value creation capabilities
2
1
Excludes recapitalization of Worldlynx in August 2014 which generated $11.3 million of proceeds
3. Mistral Equity Partners
Top-tier Management Board
Fund Management Board members have added significant value in due diligence and portfolio
company oversight; selected members of the Fund Management Board include:
Jay Schottenstein, Chairman, Schottenstein Family of Companies
Frank Belatti, Former Chairman and Chief Executive Officer, AFC Enterprises, Inc.
Donny Deutsch, Chairman, Deutsch Inc.
Steven Heyer, Former Chief Executive Officer, Starwood Hotels & Resorts Worldwide Inc.;
Former President of The Coca-Cola Company
William Louis-Dreyfus, Former Chief Executive Officer, Louis Dreyfus Group
David Simon, Chairman and Chief Executive Officer, Simon Property Group Inc.
Irwin Simon, Chairman, Chief Executive Officer and Founder, The Hain Celestial Group, Inc.
Aggregate commitments of approximately $120 million to Fund
3
4. Mistral Equity Partners
Investment Strategy
Thematic approach to the consumer industry in the lower middle market
Identify powerful demographic and psychographic trends impacting consumer behavior and
spending patterns
Develop investment themes where the impact of these trends support substantial growth
under varying economic conditions
Flexible transaction structures
Fund transactions have included buyouts, growth equity investments, recaps, roll ups, PIPEs,
and both majority and minority investments
Investments structured to meet company-specific needs and mitigate risks without
sacrificing full equity upside
Advantaged transaction origination and due diligence
Active participation by Strategic Partner and Management Board
Design strategies to mitigate risks specific to investing in the consumer industry (commodity
prices, real estate costs, etc.) with input from sophisticated companies and industry
participants
Unique value creation capabilities
Drive value creation post-acquisition by leveraging resources and experience of Investment
Team, Strategic Partner and Management Board
Help entrepreneurs develop institutional systems and processes, and help corporate
structures become more entrepreneurial
4
5. Mistral Equity Partners
Universe of retail investing
5
Consumer spending accounts for ~70% of GDP, which creates a wide breadth of retail investment
opportunities
Each retail sector has unique opportunities and risks. It’s important to “pick your spots”
Categories of Retail
Hard Goods
Electronics
Sporting
goods / action
sports
Furniture and
home goods
Home and
garden
Jewelry
(discount,
fashion, luxury)
Hobby and craft
Toys
Food and
Beverage
Grocery
Convenience
stores
Alcoholic
beverages
Pet and pet food
Dollar stores
Luxury /
specialty
Catering
Restaurants
Quick service
Fast casual
Entertiainment
Special occasion
Daypart:
breakfast, lunch,
snack, dinner
Apparel and
Footwear
Fast fashion
Lifestyle brands
Mens, womens,
kids, baby
Accessories
Multi-brand vs.
single brand
Department
stores vs.
specialty
Niche: bridal,
swim, big & tall
Health & Beauty
Cosmetics
Salon services
Gyms and yoga
Dentistry
Cosmetic
procedures
Weight loss
Other
Niche financial
services
Self-storage
Education
Value orientation: luxury/white tablecloth, aspirational, popular price/family dining, discount/outlet/QSR, dollar
Real estate strategy: malls, strip centers, urban, free-standing, pads, temporary, store-in-store
Demographic or psychographic appeal: Ethnic segment vs. broad appeal, age appeal, health vs. indulgence
Elements spanning all categories
Product/Brand lifecycle strategy: Exposure to fashion or obsolescence, seasonality, product diversity, menu changes
Franchising: Franchisor, franchisee, terms of relationship
6. Mistral Equity Partners
The zone of opportunity
Unrealized
Potential
Leadership /
Maturity
New
Unfocused
Eroding
Potential
Young Mature
Low
BrandandConceptVitality
(Differentiation&Relevance)
Company Lifecycle
Mistral invests
in the Zone of
Opportunity
Investing in this zone provides Mistral with the greatest growth opportunities and
return potential, at acceptable levels of risk. It is also unlikely that companies need
capital beyond this zone.
Retailers typically start life in the bottom left quadrant, then travel in a clockwise direction
A key consideration in investing in the retail zone of opportunity is determining what risk-adjusted combination
of top-line growth and operational improvements will provide acceptable equity returns
6
High
Maturing
Declining
7. Mistral Equity Partners
Theme Driven Investment Approach
7
Healthy living
Value /
recession
resistance
Affordable
luxury
Convenience
Diverse
channel / retail
strategy
Differentiated
brands /
products
Lifestyle
products
Natural and
organic
Green / ethical
products
Fitness
Private label
Consumer
staples
Pets
Juvenile
products and
services
Leisure
Small ticket
indulgences
“Me time” and
self-pampering
On-the-go
products
Broad product
accessibility
Novel
packaging and
design
Small footprint
retail
Multi-channel
Internet and
non-traditional
locations
Captive
customers
Disruptive
technologies
Innovative
designs
Investment themes
Demographic / psychographic trends
Shifting age
profile: maturing
boomers,
emerging
millenials
Increasing focus
on health and
wellness
Ever-busier
consumer
lifestyles
Evolving ethnic
profile and
household
composition
Abundant product
and pricing
information
readily accessible
to consumers
Sustained
economic
uncertainty
9. Mistral Equity Partners
Mistral Fund Portfolio Composition
9
Opportunities reviewed and Fund portfolio by industry1
Fund I portfolio by industry2
1
Opportunities reviewed through 8/31/2014
Fund portfolio composition is consistent with investment themes
Portfolio overview
Invested
capital
1262 opportunities
reviewed
Jamba
Blueport
XpresSpa
Vino Volo
Lovesac
Worldwise
Worldlynx
Abe’s
Shearer’s
Orval
Kent
Country
Pure
#1 private label snack food company in North
America
Key national manufacturer of refrigerated
prepared foods for retail and foodservice channels
#1 provider of portion juices to the institutional
food service market (primarily schools and health
care facilities)
#1 smoothie retailer and leading consumer brand
Leading airport wine bar and wine retailer
#1 wireless retail franchisee of Bell Canada
Leading retailer of alternative furniture with
patented products
Largest airport spa retailer
Owns and operates furniture.com, as well as
managing a full-service e-commerce platform
Leading e-commerce provider of natural and
organic products
Major supplier of innovative, environmentally
sustainable pet products and accessories
Leading provider of pet care services in the New
York metropolitan area
Spot
10. Mistral Equity Partners
Investment Themes Evident Across Portfolio
Shearer’s Jamba Worldlynx
Orval
Kent Lovesac
Country
Pure Worldwise XpresSpa Blueport Vino Volo Abe’s Spot
Healthy living
Convenience
Value /
recession
resistant
Affordable
luxury
Diverse channel
/ retail strategy
Differentiated
brands /
products
10
Mistral’s thematic focus on demographic and psychographic trends, and categories within the
consumer sector which stand to benefit from those trends, is evident across the portfolio.
Investment themes
11. Mistral Equity Partners
Flexible Transaction Structures
11
Mistral structures its transactions to enhance the risk-reward profile of its investments, offering
flexible capital deployed in a variety of ways with the goal of accelerating a company’s growth
Focus on companies with total enterprise value less than $200 million and EBITDA less than $25
million
Portfolio Company Transaction Type Transaction Structure1
Control2
Buyout Common equity, preferred
equity
Yes
PIPE Convertible preferred equity 2 board seats; negative controls
Buyout / Consolidation Subordinated debt, common
equity
Yes
Recapitalization / Growth Subordinated debt, preferred
equity, senior debt, warrants
Shared
Recapitalization / Growth Common equity, convertible
preferred equity, warrants
Yes
Buyout Common equity, preferred
equity
Yes
Buyout Common equity, preferred
equity
Yes
Recapitalization / Growth Common equity Yes
Growth Common equity Yes, with Strategic Partner
Growth Convertible preferred equity 2 board seats; negative controls
Growth Convertible preferred equity 1 board seat; negative controls
Growth Common Equity 1 board seat; negative controls
1
Includes follow-on investments
2
Represents control at time of initial investment
12. Mistral Equity Partners
Mistral Differentiation
12
As the cornerstone of Mistral’s strategy, the Fund leveraged the experience of the Investment
Team and Management Board across its portfolio to source and evaluate transaction
opportunities and enhance the value of its portfolio companies
Shearer’s Jamba Worldlynx Orval Kent Lovesac
Country
Pure Worldwise XpresSpa Blueport Vino Volo Abe’s Spot
Ability to add
value
Proprietary
origination
Advantaged
due diligence
Post-closing
value creation
Potential
synergies with
other portfolio
cos.
Note: shaded portion of circle is intended to signify level of differentiation over other potential acquirers provided by Mistral’s Investment Team and Management Board
Notas do Editor
Welcome to our 2011 annual meeting for Mistral Equity Partners. It is a pleasure having you all here today as well as those of you on the phone.
I first want to introduce the Mistral Team-- Bill, Rob, Jeff, Beth Br., Griffin, Chris, Beth N.—Valerie Lynn, Stephanie Field and Tara Young
Special thanks to Jodi Solieri for all the plans and arrangements for this meeting as well as Beth Nations for coordinating and producing the presentations today.
Strong group of leading consumer executives with strong relationship to Mistral team
Again differentiates Mistral in market and provides unique resources for sourcing and helping companies develop and meet strategic objectives
Strong commitment to success
Key Differentiator for Mistral is our strategic partnership with the Schottenstein Group and the Mgmt Board we have assembled
Have the team and capacity to invest, oversee and manage
Strong principal culture and all parties have made significant commitment to fund and have strong incentives to drive success
Aggregate commitments in excess of $128 million
We show this slide every year.
I think it is worth noting here that we have deliberately focused on what I would call growth staples.
By that I mean nothing trendy—but rather, generally speaking, areas of consumer areas ---which for different or unique reasons--- spending is continuously increasing.
It is also worth noting that there have been very few quality opportunities available. When there are---- current prices, in our view, are very difficult to justify. I can elaborate on this in the Q and A if anyone wants more detail, but suffice to say we have been blown away on price several times this year.