Brynwood Partners Goes Deep Into Hair Care; PE firm Inks 2 Deals In a Week

It’s been a busy week for Brynwood Partners

Today, the lower middle market firm announced it was buying the Alberto VO5 brand in the U.S. and Puerto Rico. Greenwich, Conn.-based Brynwood is also acquiring the Rave brand and marketing rights worldwide. The seller for both is Unilever. The deal is expected to close at the end of this month, says Ian MacTaggart, a Brynwood managing partner.

MacTaggart declined to disclose how much Brynwood paid for the hair care products. High Ridge Brands, a Brynwood portfolio company, is the entity buying Alberto VO5 and Rave. Outside the U.S. and Puerto Rico, Alberto VO5 will remain part of Unilever’s portfolio, according to a statement.

Brynwood formed High Ridge in January when it acquired the Zest brand in North America from Proctor & Gamble. The Zest deal included bar soap and body wash products. The buy of Alberto VO5 adds shampoos and conditioners while Rave sells hair sprays. “For a group with not a lot of hair, we are deep into the hair sector,” MacTaggart says.

Unilever put VO5 and Rave up for sale in the spring, tapping Morgan Stanley to run the process. Brynwood did not use an outside financial buyer. “When we were presented with the opportunity to buy Alberto VO5 and Rave, it made sense,” MacTaggart says.

Brynwood focuses on consumer deals although it does acquire companies in business services and light manufacturing. It typically spends $25 million to $60 million per deal.

Earlier this week, the PE firm also announced it had bought Pearson Candy, of St. Paul, Minn. Pearson is known for its salted nut rolls and mint patties. The seller was Larry Hassler, Pearson’s president.

Hassler has owned and operated Pearson since 1985. He sold the company because he wants to retire, says MacTaggart. Hassler is staying at Pearson in a “consulting capacity” during the transition. “He’s committed to us for as long as we need his services on a consulting basis,” MacTaggart says.

Brynwood has brought in Michael Keller, International Dairy Queen’s former chief marketing officer, to be Pearson’s president and CEO.

Why Pearson? Brynwood wanted to get a candy platform company for its sixth fund, since the PE firm already owned DeMet’s Candy with its prior pool (DeMets sells Turtles, Flipz, Stixxand Treasures. Brynwood’s fifth fund, which raised $250 million in 2004, bought the Turtles brands from Nestle in 2007 and formed DeMets).

“We know the [candy] space and know the distribution channels,” says MacTaggart. “We believe we can leverage off our experiences to create shareholder value.”

Brynwood specializes in buying corporate orphans. Including the Unilever sale, the PE firm has acquired 18 brands from nine corporate sellers, MacTaggart says. Because brands do not come with management, Brynwood can either integrate them into existing companies. Or, the PE firm creates companies for the brands where it hires management teams and set up infrastructures. For example, Pearson will be a standalone firm while Alberto VO5/Rave will become part of High Ridge.

“We’re extremely excited about both investment opportunities,” MacTaggart says.

The investments in Alberto VO5/Rave and Pearson came from Brynwood’s sixth fund, which raised $305 million last October. The fund is 30% invested, MacTaggart says.

Brynwood did not use an outside IB for either deal. Ben Frost of Morgan Stanley advised Unilever. Ingo Schulz of Prestwick Partners provided financial advice to Pearson.