Palladin Consumer Retail Partners invested in Leapfrog Brands, a beverageware business, with an investment playbook built exclusively around organic growth.
Leapfrog, best known as a designer and manufacturer of drinkware, has more recently expanded to include bakeware and foodware products such as portable water bottles, coffee mugs, food-storage containers.
“The company will continue to evaluate other product categories for home, office or travel usage,” although growth through add-ons are not part of the strategy, said Mark Schwartz, CEO at the Boston firm.
Impressed by its design-led approach, the private equity firm met with the target prior to covid. “When the pandemic hit, they [Leapfrog] stepped back and we got busy dealing with our portfolio and managing another acquisition,” Schwartz said.
“Leapfrog exceeded projections amid the pandemic and the conversations soon resumed,” Schwartz added.
The Chicago target, which retained a banker for the process, has an omni-channel approach. It sells products through traditional big retailers like Target, Walmart and eCommerce powerhouse Amazon, as well as through its own website.
For Leapfrog, this represents its first institutional investment. The deal, which closed on the last day of 2020, was completed in partnership with the management team.
“It [included] very low leverage,” Schwartz noted. KeyBank provided debt financing as well as an unfunded revolving credit facility to support future growth. “We like to over equitize companies,” he added.
With respect to the covid impact, some product lines benefitted whereas others were hurt, Schwartz said. “Consumers were not going to the office every day,” he said, referring to the more travel friendly product line.
Looking ahead, Palladin intends to expand Leapfrog into new verticals and increase its product offering. The existing management team, which will drive this growth, will remain intact.
Much like other acquisitions by the PE firm, there will also be some knowledge sharing between operating partners and teams from other portfolio companies.