M and M Direct



Investment Date: July 2004Exit Date: October 2007
Investment Type:Buyout from two founding partnersExit Type: Secondary
Sector: Online retailer/ ConsumerEnterprise Value: £86m


 

 

Business Description
  • M and M Direct was a mail order and internet retailer of discounted branded sports goods and leisurewear.
  • Suppliers include all major sports brands and a variety of leisure brands. Product is sourced direct from the brand as either clearance or Special Make-Up units

Investment Rationale
  • This was a fast-growing business with long term history of strong profitability with the potential to move its sales proposition fully online
  • Discreet nature of sales enables M&M to provide a solution for brands’ excess stock that minimises the potential for channel conflict.
  • Potential existed to develop relationships with additional brands to become a key channel partner

Strategy/Value Creation
  • A strong MBI element to the deal with the introduction of an experienced CEO from within the sports industry and a Chairman, Peter Chappelow, with a direct marketing background.
  • Further strengthening of the management team in senior positions including a new FD, Buying and Merchandising director and Marketing director – the business was previously under-managed
  • The product offering was expanded to include more ‘leisure brands’ not just sports – this ultimately led to the renaming and full rebranding of the company to M and M Direct from M and M Sports
  • Transitioning from a ‘mail order business with a web site’ into a ‘primarily internet based retailer with a catalogue’. This included the development of a ‘customer acquisition engine’  and internet-based lead generation. As part of this transition its retail outlets were also closed down with the sole focus of online sales

Performance
  • During ECI’s investment sales grew at 18% p.a. to £80m and profits at 28% p.a. with employment doubling to 600Sold to TA Associates in October 2007 for £86m representing a return of 4.3x cost and a 59% IRR

 

 

 

 


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quote The great thing about having bright people on the board as we did from ECI, is that you get different observations and ideas being presented during the board meetings"

Peter Chappelow, Chairman of MandM direct.

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