Brand Management Firms Get a License to Buy
Thanks to deep-pocketed investors and readily available IPs, brand management firms are emerging as a major force in licensing.
Firms including Authentic Brands Group, WHP Global, Marquee Brands, Full Sail IP, and Bluestar Alliance—all backed by private equity firms—are tracking the market for available IPs as companies increasingly shed brands amid tight finances or broader restructuring.
And if this sounds familiar, it’s because, in many ways, this new wave of brand management firms follows an earlier generation that included Iconix Brands Group, Sequential Brands Group, and Apex Global Brands (formerly Cherokee Brands Group). Iconix was purchased by Lance Capital for $585 million, while Apex is now owned by Galaxy Universal.
Yet unlike their predecessors, who were publicly traded at their peak, this recent wave of firms is backed by private equity. This includes the likes of BlackRock (which put $875 million into ABG in 2019), Ares Capital Management (which invested $375 million in WHP this year), Neuberger Berman ($462 million with Marquee in 2016), and Warburg Pincus and LMCA (which joined forces for the joint venture Full Sail IP Partners in 2021). ABG, which has acquired 30 brands since 2017, received $500 million from General Atlantic in its most recent funding round.
“It’s a combination of more brands being available and brand management firms quickly signing licensing agreements to give the equity firms on their investment,” said Peter Roccamo, President of Esquire Brands, whose children’s footwear licenses include Jessica Simpson, Kenneth Cole, DKNY, and Marc Fisher.
Whether the current crop of firms will eventually struggle to service their ever-growing IP portfolios remains to be seen. But this current strategy does appear to be in response to the issues previously faced by firms like Apex, which was heavily reliant on Target’s DTR program and suffered when the retailer took that business in-house.
As a result, brand management firms now seem to be focused on spreading the risk. While ABG is primarily looking at apparel and footwear brands, it also has deals with sports stars like Shaquille O’Neill and Muhammed Ali. Full Sail, which acquired the Odwalla and Weatherbeater brands and is nearing the purchase of a hardgoods brand, is also focusing on children’s games and toys as well as food to lessen the competition with other firms, CEO Alan Kravetz said.
“Many of these firms have an infrastructure set up where they can acquire brands and drop them onto a platform and I don’t think that will ever stop,” said a brand management executive. “You couldn’t come into the brand management business at a better time, with brands being available as companies restructure. And there are a lot of great brands out there that are available and they’re not commanding the premium they once did.”
Among the brands being sold recently were Hush Puppies and Sperry. Wolverine Worldwide sold the Keds brand to Designer Brands (DSW) and also licensed the retailer for Hush Puppies. It also has put the Sperry brand up for sale. Additionally, ABG bought Vince Holdings and its accessories business along with Reebok and Ted Baker.
“It’s going to be a challenge for all of these companies to manage these portfolios and ensure that they are getting a return on their investment,” said Greg Battersby, Managing Member of the Battersby Law Group. “That becomes increasingly difficult as the brand portfolios grow.”