Steppin’ it up
Invested Banker to the Consumer Industry
Description
TARGET: Implus Footcare, LLC
OWNER/PARENT: FdG Associates, LLC
COUNTERPARTY: AEA Investors, LLC
SEGMENT: Health & Wellness
TRANSACTION VALUE: Undisclosed
CLOSING DATE: May 19, 2008
ROLE: Exclusive Financial Advisor

Implus Footcare, LLC (“Implus” or the “Company”), headquartered in Morrisville, North Carolina, is the leading supplier of footwear accessories to the specialty retail channel, and a key innovator for category in the food, drug and mass retail channels. Founded in 1988 to market a sport-specific insole device, the Company now sells a wide range of high quality footwear accessories including shoe insoles and devices, shoe care products, shoe laces, socks and traction devices primarily under the brands Sof Sole®, Airplus®, Sof Comfort® and Yaktrax®. Led by Seth Richards (CEO) and Todd Vore (President), Implus is a highly innovative and entrepreneurial company that has led its peers in the introduction of industry-changing products, marketing and merchandising, fulfillment and customer service offerings.

With sales exceeding $500 million, employing more than 4,000 employees in 80 countries, Kaz is today the world’s largest vaporizer/humidifier manufacturer and continues to be the most trusted name in the industry

“The Sawaya Partners team managed a very effective process. We enjoyed developing a close relationship with them and the firm over the past few years. They provided excellent advice, keeping our best interests in mind, whether it was through our sale process, or evaluating potential acquisition opportunities. My colleagues and I look forward to working with them in the future.””

SETH RICHARDS CHIEF EXECUTIVE OFFICER, IMPLUS FOOTCARE, LLC

In 2001, FdG Associates LLC (“FdG”) purchased a majority interest in the Company in a recapitalization that facilitated a generational transition in the management of this family-owned business. Under FdG’s ownership, Implus’ net sales nearly tripled and EBITDA more than tripled as a result of the Company’s (i) expansion into new product categories including shoe laces (2002), socks (2004), traction devices (2006) and odor control (2007), (ii) introduction of innovative distribution systems including “one-stop-shop”, “vendor managed inventory” and “direct-to-store from DC”, and (iii) the industry’s first gender segmented product line under the “Airplus For Her” brand. In early 2005, FdG and the Company made the decision to interview selected investment bankers to serve as the Company’s trusted advisor as it contemplated acquisitions and other growth strategies as well as to represent the Company in a future sale transaction. In July 2005, Sawaya Partners was engaged by the Company as its exclusive financial advisor.

In May 2006, the Company acquired Yaktrax, the leading brand of outdoor traction control devices sold exclusively in the outdoor retail channel as well as to QVC. Yaktrax represented a compelling acquisition opportunity resulting from the operational expertise that Implus could provide as well as substantial growth potential for Implus to sell traction devices in its core specialty and mass channels, and for the Company to leverage Yaktrax’ outdoor channel to sell insole, devices, socks and shoe care products. Yaktrax was fully integrated into the operations of Implus within six months.

In September 2006, Sawaya Partners began contacting potential strategic and financial buyers for the Company. There was strong interest in the Company and multiple parties submitted definitive proposals and substantially completed their due diligence. Ultimately FdG decided not to sell the Company at that time based on the impact of a shortfall in Yaktrax sales caused by the unusually warm winter months in the fourth quarter of 2006. In July 2007, Implus completed its second acquisition with the purchase of Sneaker Balls, the leading brand of odor control products for athletic and work shoes.

The Sneaker Balls acquisition was fully integrated into the Company’s sales, distribution and sourcing operations within one month, and was accretive to Implus’ earnings in its full year of Implus’ ownership. At the end of fiscal year 2007, FdG and Implus management agreed that it was time to seek a financial partner that could help Implus accelerate its growth through additional acquisitions and through the execution of its aggressive growth plans. In addition, FdG expressed an interest in potentially making a new investment in Implus through its second fund, alongside selected participants in the process. FdG’s interest in making a new investment in Implus was a clear sign of endorsement of the Company’s future growth prospects.

In mid-January 2008, Sawaya Partners began a highly targeted marketing process that focused on a limited number of potential buyers. Specifically, the process included certain parties that demonstrated the greatest level of interest in the 2006 process as well as a limited number of new parties that had approached FdG, Sawaya Partners or Implus directly in 2007. The initial screening and qualification phase of the sale process was highly customized and involved Sawaya Partners presenting an Executive Summary presentation of the Company and transaction opportunity to each potential buyer.

Based on this presentation, a number of the potential buyers were invited to attend an in-depth management presentation at the offices of Sawaya Partners. Every party that attended the management presentation (with one exception) submitted a detailed acquisition proposal. Two of the buyers distinguished themselves through the terms of their proposals as well as the financial and strategic value they potentially offered Implus. These two buyers were provided with a short window of time to complete their due diligence, negotiate the terms of a definitive agreement and to arrange committed financing to fund the transaction.

  • On May 19, 2008, Implus was sold to an investor group comprised of management, AEA Investors LLC (“AEA”) and a new investment from FdG
  • FdG successfully monetized its investment with a very favorable outcome for its limited partners, while also making a new investment alongside AEA to continue partnering with Implus during the Company’s next exciting growth phase
  • Sawaya Partners successfully structured and executed a highly tailored sale process, in a condensed time frame during challenging credit market conditions
  • The orchestration and results of this transaction were viewed by the buyer, seller and management as a win-win-win outcome
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