James Jebbia had the entrepreneurial idea in the heart of America’s fashion mecca, New York City, in the mid 1990’s to create an apparel brand that instead of relying on an established iconic label or designer and traditional mass market retail distribution networks would focus on creating demand through limited edition, scarce products promoted primarily online through word of mouth in the skateboarding and streetwear communities. The scarcity of the products created a unique secondary market where the company’s hoodies, t-shirts, and other Supreme branded products were resold at a significantly higher value than their purchase price, as a form of wearable art, increasing demand for each new release and long lines of loyal customers and home based apparel industry entrepreneurs at their twelve stores. Recognizing the potential of the brand, the need for working capital, and that executive talent was necessary to achieve the company’s potential, Mr. Jebbia sold approximately 50% of the company in 2017 to the Caryle Group, Inc., a private equity firm, for roughly $500 million. This month, November 2020, together along with the Caryle Group, Inc. and another private equity firm, Good Partners LLC, that invested in the company, Supreme sold to VF Corp, the parent company for Vans and Timberland, for about $2.1 Billion (Supreme Streetwear Brand Sold to VF in $2.1 Billion Deal – WSJ). The Supreme success story provides evidence that even in some of our nation’s darkest days, the COVID-19 pandemic, and in one of the most mature, competitive industry environments that the American free market economic environment provides unparalleled opportunity for innovation and prosperity for anyone who has an idea, the ability to execute, and a willingness to roll up their sleeves and work with optimism and a belief in the possible.
IBA, as the oldest business brokerage firm in the Pacific Northwest specializing in the sell side representation of entrepreneurs, frequently works with people of Mr. Jebbia’s demographic. The most common demographic of our business owner clients are individuals wishing to sell their privately held companies and family businesses to retire when no internal successor exists. The second most common are people like James Jebbia who have created a business model, but wish to exit through sale either because they enjoy creation more than management, recognize that the company needs stronger executive talent in the C suite or resources than they possess to allow the business to achieve its potential in the marketplace, and/or simply wish to harvest all or part of the “fruits of their business acumen and labor” with a personal equity creating event.
The business sale representation of entrepreneurs in this second demographic group is an ability that IBA is uniquely qualified to perform based on our knowledge, experience, and professional skill set as mergers & acquisitions intermediaries. This ability documented with over 4200 completed transactions with a greater number of happy customers is best illustrated in the following three components of our comprehensive representation services:
- Knowledge of Market Value – The valuation of a business is subjective science requiring knowledge of finance, accounting, investment, and relevant market conditions. A properly valued company will be pursued in a competitive marketplace where motivated buyers pursue the opportunity with attractive prices and terms. An overvalued company will sit on the market with a lack of engaged buyers becoming stale in the public domain. An undervalued company has the potential to be right sized in value by market demand, but also an equal or greater possibility of selling at a discount from its market potential. IBA represented companies consistently sell within 10% of our asking price. We know the marketplace and have the ability to justify the values we take companies to market at to a spectrum of buyer demographic groups.
- Market Creation – Marketing a privately held company for sale is a unique sales task. From one perspective, the goal is to market the product to create the highest amount of market knowledge of the opportunity. However, from another perspective it is in the seller’s best interest for no one to know the business is for sale and maintain an environment of strict confidentiality, so employees, customers, and suppliers do not become aware of ownership’s desired transaction goals. The ability to navigate this tightrope to a successful outcome requires knowledge, experience, skill, and a business brokerage firm to have high creditability and brand awareness in the marketplace. IBA represented projects traditionally sell between three and nine months from entering the market. Our standard six-month listing agreement is one of the shortest in the mergers & acquisitions industry. The reason the relatively short term exists at IBA is because we perform for our clients.
- Deal Negotiation & Facilitation Skill – Generation of a party interested in acquiring a business is relatively easy if you have a quality product and know how to market it. Real skill is demonstrated through the price and terms achieved and the ability to get the transaction to closing smoothly and on time. IBA is unique in the marketplace in that we truly “put our money where our mouths are” as business brokers. IBA charges no retainers or administrative fees for our clients. This is true whether the final sale price is six, seven, or eight figures. We only seek payment when our clients achieve their goals with a completed transaction. Every member of the IBA team is a highly skilled sales professional comfortable with being paid 100% on commission. The team completed four deals in September, three in October, and is anticipated to close a double-digit number of deals from November to January. As a firm, IBA is tracking to equal or exceed our 2019 financial performance in 2020 despite the uncertainty in the economic environment caused by COVID-19 and the election.
Unfortunately, IBA did not represent James Jebbia in the sale of Supreme. However, we have successfully represented entrepreneurs in the manufacturing, service, technology, retail, and hospitality sectors this year who in terms of achieving their vision and having a loyal legion of customers experienced similar success. If an exit strategy in 2021 is desired, we would welcome the opportunity to provide an overview of our client services.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.