Jill Granoff is finding her footing in the ultracompetitive world of private equity investing — and is ready to start writing some bigger checks.
Less than two years after being tapped to build Eurazeo Brands as chief executive officer, the beauty and apparel veteran has made investments in Nest, Pat McGrath Labs and, last month, Bandier, with a $25 million minority stake.
All together, that means Granoff has put to work about 20 percent of the $800 million kitty provided by parent Eurazeo, the Paris-based private equity company that recently exited a very successful investment in Moncler.
Granoff, who held senior roles at Estée Lauder, Victoria’s Secret, Liz Claiborne Inc. and took Vince Holding Corp. public as chief executive officer, is on the hunt for brands across six sectors: beauty, fashion, home, wellness, leisure and food.
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Beauty is the most developed category in the portfolio so far — which makes sense given that’s where Granoff has the deepest experience. Nest ticks off the box for the fragrance category while Pat McGrath covers color cosmetics, but the ceo said Eurazeo Brands could do a deal in skin care and also hair care.
And while Bandier is an activewear play, she said there’s room for an outerwear brand and footwear in the fashion category.
To hit Granoff’s goal of putting that $800 million to work in 10 to 12 portfolio companies, she said she has to start looking at bigger investments, in the $50 million to $100 million range.
While Granoff’s operating career was about building brands, she now has a broader take.
“In private equity, it’s not just what makes a great brand, but what makes a good investment,” she said.
That means that in addition to finding a brand that “recognizes evolving consumer needs and addresses those needs in unique and innovative ways,” Granoff is thinking about valuation, governance and, most importantly, the exit of the investment.
In beauty, that last part is relatively straightforward.
“You have many large, strategic beauty businesses that are now, in my view, buying innovation instead of building innovation,” she said.
Fashion is harder.
“While you still have the luxury players like [LVMH Moët Hennessy Louis Vuitton] or Kering, you no longer have the exit options in companies like Liz Claiborne that at one point had 40 brands, Jones or Kellwood. Even if you think about VF,” Granoff said, “there’s not as much exit optionality.”
Tapestry Inc. and Capri Holdings are stepping in to fill the void, but it remains to be seen just how active they remain as acquirers over the long term.
It helps to have brands that are multifaceted and have various strengths to eventually appeal to a would-be buyer.
Bandier, for instance, feeds into the still-growing trends of fitness and casualization. It’s also a very digital business — roughly half its sales come from the web — and has an experiential component with classes through Studio B.
It’s also a business Granoff can help develop.
She’s looking for brands that Eurazeo can aid by tapping into the experiences of her 10-person team, their networks and outside advisers.
Granoff starts off thinking of the exit, but doesn’t have a set timetable given the source of her capital.
It’s a process informed by something she learned from her former boss, Leslie Wexner, ceo of Victoria’s Secret-parent L Brands Inc.
When she was plotting how to double the size of the Victoria’s Secret beauty business to $1 billion, she said Wexner advised her to “start with the end in mind. You have to close your eyes and think about what does a billion-dollar business look like, you cannot increment off the base.”
So she works with management to define a vision of the future, outlines a roadmap to get there and identifies key priorities that drive growth and profit.
“We find often people are trying to boil the ocean,” she said. “They have way too many initiatives and so what we look to do is to monetize and prioritize.”
If her plans pan out, she’ll be doing much more of that.