Investors Close on Reed Krakoff Deal

Designer partners with Venturehouse and Danaher as well as T. Rowe Price-managed funds to buy majority of namesake business from Coach.

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Reed Krakoff has teamed with a group of investors and bought control of his namesake business from Coach Inc.

This story first appeared in the September 7, 2013 issue of WWD.  Subscribe Today.

Mark Ein, founder and chief executive officer of Venturehouse Group LLC, Mitch Rales, cofounder of Danaher and certain funds managed by T. Rowe Price, all took a piece of the business in the management-led buyout.

Krakoff is the company’s largest shareholder and will serve as creative director. Coach, which served as an incubator for the brand, retained a minority stake. And Valerie Hermann will continue in her role as ceo.
“We have all come together with the same long-term vision for the brand and for the future of American luxury,” Krakoff said in a statement.

The designer resigned from Coach when the deal closed Aug. 30. Krakoff spent 16 years rising to president and chief creative director of the leather goods company, helping it grow into a powerhouse that is now turning in a lifestyle direction. The Reed Krakoff business began as an initiative to drive brand creativity at the firm in 2008 and later evolved into a stand-alone brand.

Ein will be chairman and said the investor group would “use our capital and extensive growth company experience to help Reed continue to build the next great American luxury brand.”

Over the past 20 years, Ein has led $650 million worth of private equity, venture capital and public company investments, with an internal rate of return of more than 40 percent. Ein is also the founder and owner of the Washington Kastles, the World Team Tennis franchise in the nation’s capital.

In a regulatory filing Friday, Coach said the sale included the equity interests of Reed Krakoff LLC, as well as the Reed Krakoff brand name and related intellectual property rights.

Coach said the buyer, which it identified as Reed Krakoff International LLC, obtained independent equity financing upon the closing. Coach did not extend credit to the buyer, which was possible under a July sale agreement.

Coach and the business also signed a transition services deal and terminated a 2010 agreement granting Coach “the right to develop and market lines of products under the name, likeness, image and/or reputation of Krakoff.”

While still finding its footing, the Reed Krakoff brand has developed an array of products from small leather goods and accessories to shoes and ready-to-wear. The brand is sold at retailers such as Saks Fifth Avenue and Neiman Marcus, as well as on the designer’s e-commerce site, where an alligator-themed cashmere and merino sweater goes for $1,190 and a leather and anaconda hand runs $3,990.

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