Bidders have included a raft of private equity shops — we’ve heard up to 10 firms expressed interest — and some strategics. Michael Kong, Modern Luxury’s founder and ex-CEO, also is trying to get a proposal in place, but is not viewed as a leading bidder.
It’s unclear what Modern Luxury can fetch. Berkery Noyes is running the auction.
“There was a lot more interest in the business than was anticipated,” a source said.
Kong had owned 40% of Modern Luxury but reportedly defaulted on $120 million in debt and was ousted, according to the New York Post. He was replaced by William Cobert, founder of EBITDA Media, who is acting as interim CEO of Modern Luxury.
Kong erred by trying to expand the Modern Luxury business in a devastated economic market. He also tried to position Modern Luxury to go head to head with heavyweights like Condé Nast. “It was a business that was viewed as recession resistant and that didn’t prove to be true,” said a source familiar with the company.
GE Business Financial Services and NewStar Financial, Modern Luxury’s lenders, are now in control of the company.
Modern Luxury was riding high in 2007 when its then-owner, Shamrock Capital, sold its 60% stake to Clarity Partners. At the time, Modern Luxury, had $16 million of EBITDA, but it has since declined significantly.
Modern Luxury has nearly 30 publications in 13 major markets including Angeleno, Manhattan and Interiors.
Calls to Modern Luxury and Clarity were not returned.