Suitors came calling and nudged Opening Ceremony out into the broader dating market.
Sources said the retailer and designer brand received in-bound interest from would-be investors and is about to start playing the field to see if it’s the right time to bring in a new partner.
One person close to the Opening Ceremony situation cautioned that “nothing’s been set in stone” and that the process is just beginning.
The outcome could be telling, though.
It’s been a tough time for fashion and retail companies with the digital blitzkrieg of e-commerce competition and a consumer yearning for experience over stuff. Deals have been few and far between in designer fashion and so a new investment in Opening Ceremony could help set the tenor in the market. And if a deal ultimately materializes and it looks like a good one, the transaction could clear a path for other designers looking for new backers.
Fashion attorney Douglas Hand, at Hand Baldachin Amburgey, said Opening Ceremony, with both branded designer and retail businesses, represents “an interesting proposition for investors.”
“It would inform the investment community to have a middle market deal that hopefully they could use to peg some valuation to, given the doubts about retail,” Hand said, noting that an Opening Ceremony transaction could help support the mergers and acquisition market.
The M&A dance is one the 16-year-old Opening Ceremony has been to before.
The company, founded by Carol Lim and Humberto Leon, took an investment from Berkshire Partners in 2014, although the details were never discussed publicly and it is not known who has majority control.
The Boston-based private equity company, with $16 billion in aggregate capital raised since 1986, is known as a patient investor that’s not necessarily looking for a quick turn. But Berkshire will eventually seek to cash out of Opening Ceremony and could use current exploration to sell at least a part of its stake.
“File it under the ‘premature’ zip code,” said a source familiar with the investor’s thinking. The source added that Berkshire is open to listening when would-be buyers come knocking and that the process was just starting.
The business side of Opening Ceremony has benefited from its association with Berkshire, which in tandem with its investment helped establish a board led by Glen Senk, former chief executive officer of Urban Outfitters Inc. and David Yurman. (Senk linked with Berkshire to establish a separate investment house, Front Row Partners).
Berkshire is seen as being instrumental in helping to strengthen the back of house operations at Opening Ceremony, while also offering strategic insight.
That’s a pretty standard play-out of the private equity playbook, where the investor buys into a popular brand that still has room to grow and then seeks to professionalize the operations, teeing up the company for continued growth and then selling to let the next buyer build on that foundation.
But if that’s the normal route, Opening Ceremony might ultimately wind up somewhere else with an unexpected partner.
The firm is known for breaking the mold, acting, for instance, as brand, retailer and collaborator all at once.
Leon and Lim opened their first store on Howard Street in New York’s SoHo neighborhood, imagining it as a version of the fashion Olympics where small designers from countries around the world would be mixed in with bigger names.
The concept expanded to Los Angeles in 2007 and Tokyo in 2009 and the brand’s wholesale business grew through Neiman Marcus, Net-a-porter, Shopbop.com and others.
Leon said in October: “When we think about collaborating with brands, we always want to work with those who make the pinnacle versions of our favorite pieces. This season we wanted to work with a true heritage American outerwear brand, and Columbia was our top pick. We wanted to celebrate the Whirlibird, which is this great Eighties ski and snowboarding jacket that we covered in OC prints.”
Lim and Leon won the Cooper Hewitt Design Award for Fashion Design in 2016 and are co-creative directors of the LVMH Moët Hennessy Louis Vuitton-brand Kenzo.