ACON Investments has closed its buy of Everett, Washington-based Funko, a provider of branded pop culture products. No financial terms were disclosed. As a result of the transaction, Fundamental Capital will hold a minority ownership stake in Funko while remaining on its board. PNC Bank and Cerberus Business Finance provided the debt financing for the deal while Harris Williams & Co served as financial adviser to Funko.
WASHINGTON, Nov. 2, 2015 /PRNewswire/ — ACON Investments, L.L.C. and its affiliates (“ACON”) announced today that it has completed the acquisition of Funko, LLC (“Funko” or the “Company”), from Fundamental Capital, LLC. Funko, located in Everett, Washington, is one of the largest providers of branded pop culture products to a diverse range of consumers and retail channels. Funko’s unique, stylized products connect consumers to their favorite entertainment content and characters through a broad portfolio of long-tenured studio/content relationships and multiple product lines. Funko has built entrenched and long-term relationships and an expansive library of 250+ properties with a diverse base of 100+ studio/content providers whose evergreen properties and new releases drive a robust pipeline of new products and recurring revenue. Equity financing for the transaction will come from ACON’s third US domestic buyout fund, ACON Equity Partners III, L.P.
Terms of the transaction were not disclosed.
As part of this transaction, Funko will continue to be led by CEO Brian Mariotti and other members of the existing senior management team, who will all be meaningful equity owners alongside ACON. Fundamental Capital will retain a Board seat and a minority ownership stake in the business.
“We are excited to be partnering with Brian and the entire Funko team,” said Ken Brotman, Founding Partner of ACON. “Funko has established itself as a fore-runner in the pop culture space and we look forward to building value in a business that is very well positioned for continued growth,” added Brotman.
Brian Mariotti commented, “The growth Funko experienced following our partnership with Fundamental Capital has been spectacular. Now we’re ready to take Funko to the next level and I look forward to partnering with ACON and benefiting from their experience to help us get there. As Funko continues to be a category disrupter in the pop culture and entertainment space, ACON’s expertise will be a welcome asset.”
ACON has had prior successful experience investing in businesses tracking the pop culture market generally. In August 2007, ACON invested in Spencer Spirit Holdings, which included Spencer’s, a long-time iconic mall-based teen retailer, and Spirit Halloween, a leading seasonal retailer of Halloween products. During ACON’s ownership, Spencer’s grew to become one of the higher performing teen retailers amongst its competitive circuit, and Spirit expanded into the largest seasonal retailer of Halloween products with over 1,000 stores nationwide. Buyouts magazine awarded ACON its March 2014 “Middle Market Deal of the Year” award when the firm substantially exited this investment in 2014. ACON fully realized its entire ownership stake in Spencer Spirit in 2015.
Debt financing for the acquisition is being provided by PNC Bank and Cerberus Business Finance. Hogan Lovells US LLP acted as legal adviser to ACON and Reed Smith LLP acted as legal adviser to the sellers. Harris Williams & Co. acted as exclusive financial adviser to Funko in the transaction.
Funko, founded in 1998 and located in Everett, Washington, is a leading provider and innovator of branded pop culture products. Funko has built entrenched and long-term relationships with a diverse base of 100+ studio/content providers and an expansive library of 250+ properties. Funko’s products are available through multiple retail outlets including specialty stores, mass-market retailers, e-commerce, international and direct-to-consumer. For more information on the company, please visit www.funko.com.
About ACON Investments
ACON Investments, L.L.C. is a Washington, DC-based international private equity investment firm that manages private equity funds and special purpose partnerships that make investments in the United States and Latin America. Founded in 1996, ACON has responsibility for managing approximately $4.2 billion of capital. ACON has professionals in Washington, DC, Los Angeles, Mexico City, Sao Paulo and Bogota. For more information, visit www.aconinvestments.com.
About Fundamental Capital
Based in San Francisco, Fundamental Capital is a private equity firm that invests in small to mid-sized growth companies, focusing on consumer-based businesses. With extensive operating experience at the partner level, the firm provides not only capital; but also deep, hands-on strategic, operating and financial guidance to grow the companies in its portfolio. Fundamental Capital will retain a board seat and a significant ownership stake in Funko. For more information, visit www.fundamentalcapital.com.