Financo Inc.’s troika has a new operating theme for 2014 and beyond: No more same-old, same-old.
That’s a reflection of the investment banking firm’s expanded focus on consumer brands — beyond retail and apparel — and chairman and founder Gilbert W. Harrison’s succession plan for the firm. And for the first time in its nearly 43-year history, Financo is also eyeing the launch of a private equity fund of at least $75 million to invest in consumer firms with annual volume at the lower end of the middle-market spectrum.
“I feel good about the succession plan. I wanted to make sure Financo remains vibrant long after I’m not around,” Harrison said.
The plan kicked off in July 2011 when the boutique firm brought in Colin S.A. Welch, and then John A. Berg a year later in September. Both Berg, chief executive officer, and Welch, president and chief operating officer and ceo of Financo Europe, have each made investments in Financo. The two, along with Harrison, comprise Financo’s board.
In the past 15 months, the three have analyzed the business, added bankers to their existing staff, and crisscrossed the globe on deals, often with each member of the Financo board on a different continent on any given day. The push toward consumer products is the result of what they’ve learned on their travels and where they think Financo needs to be as they look toward the future.
According to Berg, the shift toward consumer products from retail and apparel is the natural evolution of three key changes in the consumer world: globalization, technology and changing demographics.
The change also comes at a time when there is a greater focus on the monobrand, such as a Michael Kors or Tory Burch, or even Fifth & Pacific Cos. Inc. jettisoning Lucky Brand jeans and Juicy Couture to become just Kate Spade & Co.
Regarding a possible private equity fund, Berg explained that Financo sees many brands still in the early stages having a “DNA that makes them special,” but possibly too young in their development to actually access the pool of potential financial and strategic acquirers. “This fund for early-stage firms will help incubate them as they grow, and at the same time [allow us to] not compete with our clients,” the ceo said. The current timetable is for fund-raising to occur later this year and, after the regulatory requirements are in place, have the fund operational in 2015.
First up in that shift in focus is the Financo CEO Forum — the 24th annual event that’s held today, in partnership with MasterCard Advisors, at 4:30 p.m. at The Harmonie Club in New York — from what was primarily a retailer-focused theme to now a consumer branding showcase. Marigay McKee, president of Saks Fifth Avenue, is the moderator, with panelists Tommy Hilfiger, principal designer and founder of the Tommy Hilfiger Group; Aerin Lauder, founder and creative director of Aerin, and Andrew Rosen, ceo and founder of Theory.
Berg noted, “As this industry evolves, this conference evolves, too....We are trying to keep this relevant to where the industry is going today.”
That will be evident in the change in attendees this year as well. While some retail ceo’s will be in attendance at the event, which is filled to capacity with nearly 300 expected, new this year will be a greater representation of potential investors from members of the investment community. Also present will be a broader representation from the digital world.
As for the Financo brand and where the business is heading, Berg said: “We’ve enhanced the talent and the capability of the firm so it can now cover a broad range of transactions. Our coverage expansion has been dramatic, and more than just retail and apparel. There’s a significant beauty [component] and consumer brands can be hard goods, soft goods, footwear and restaurants.
“The scope of what we are, who we are, is more consumer than retail and apparel,” Berg said.
He explained that the forum panelists will address how building brands in today’s environment is very different from, for example, when Tommy Hilfiger started. That’s due in part to how technology can be used to help a business, overall globalization and how younger consumers today are different from their counterparts of 20 years ago.
Each brings a different perspective to the panel, Welch said. He noted that Lauder is building a brand that appeals to the younger consumer, while Rosen, who also invests in emerging contemporary brands, can speak on brand-building targeting a range of consumers from the mature to the Millennial.
Even with all the global deals Financo is involved in — bankers were traveling last year to France, Spain, Brazil, the U.K., Italy and Australia to name a few countries — all that chasing was done from one team out of the New York office. Welch, who has closed more than 70 transactions globally and was managing director and head of Europe, Middle East and Africa retail and luxury goods investment banking at Credit Suisse Securities Europe’s London office before joining Financo, said the firm has considered the possibility of opening a London office. That would make London the hub of its European base of activities, the second-largest deal base for Financo after the U.S. The company has a London affiliate, Financo Ltd.
For now, Harrison’s mantra is echoing in the Financo hallways: “We have to be world-class in execution and world-class in understanding the dynamics in the industry we play in. This is how best to serve the client.”
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