The Client

MallyGirl, LLC

Maryland-based, prestige cosmetics brand whose growth had been hampered by inventory mismanagement.

The Challenge

This international cosmetics brand had seen sales grow exponentially over the prior 3 years, but an inability to manage inventory had left Mallygirl cash constrained and unable to service its debt.  A CRO was retained to implement cost cutting measures, but despite improvements, a sale was required. After completing an internal process, a bid was obtained, however upon receiving the bulk sales notice, a group of unsecured creditors forced the company into an involuntary Chapter 7. With the sale being blocked and the going concern value of the business quickly deteriorating, Equity Partners was retained.

The Process

Equity Partners was given 30 days to market the business and either find a competing bid or prove the prior offer, which was now the stalking horse, was the highest and best offer available. Through an exhaustive marketing process, Equity Partners executed confidentiality agreements with 62 companies interested in the acquisition and negotiated a qualifying bid in excess of the stalking horse’s bid.

The Solution

Equity Partners conducted an auction amongst the two groups and after 18 rounds of bidding, the stalking horse was deemed the highest and best bid after an increase of 45% to their initial offer. The U.S. Bankruptcy Court approved the sale the following day and closing occurred three days later ensuring going concern value was retained and recovery for the estate was maximized.