mergers & acquisitions | Jun 12, 2024 |
Havenly acquires St. Frank

Havenly’s fast-growing house of brands just got a little more crowded. Only two months after purchasing The Citizenry, the Denver-based company has announced another acquisition: whole-home brand St. Frank. The terms of the deal were not disclosed.

“We’re always thrilled to partner with brands that have really captured their audience,” wrote Havenly founder and CEO Lee Mayer in a release. “I’ve been a fan of St. Frank for years, and am so excited to have come to terms that made it possible for the brand to join us as a portfolio company.”

St. Frank was founded in 2012 by entrepreneur Christina Bryant, fresh out of the Stanford MBA program; COO and CFO Stephanie Peng, who joined the company in 2014, also has a co-founder title. In its early incarnation, the brand sold artisan-made textiles and decor from around the world. Over the years, it began adding its own product lines into the mix, and expanded into categories like tabletop, bedding and gifts, along with more esoteric offerings like surfboards and skateboards.

To fund growth, Bryant and Peng raised several rounds of capital. Over time, the pair opened five stand-alone shops, and struck deals to sell their goods wholesale through retailers like Anthropologie and Moda Operandi. However, in recent years the company had closed all but its Palm Beach and New York locations and was struggling to achieve profitability.

“Despite the fact they were doing pretty well, it was just too small of a business to support independently with the capital stack they had,” says Mayer. “And I think [Bryant and Peng] just wanted an ending—a good home for the brand.”

Havenly declined to provide exact figures for the transaction, but like some of the company’s past acquisitions, the deal was structured to carve out St. Frank’s assets from its liabilities—a maneuver that allows Havenly to effectively take ownership of the brand without assuming all of its debts. Neither co-founder will stay following the acquisition, though members of the merchandising, customer service and creative teams will remain. The Palm Beach shop has been shuttered, and the New York location is soon to close.

Going forward, Mayer says the plan is to focus on direct-to-consumer and wholesale channels, and to integrate St. Frank into Havenly’s marketing and sales operations. Though the brand—with its focus on artisan sourcing—is superficially similar to her last buy, The Citizenry, she says that St. Frank was distinct enough to make the deal worthwhile.

“The aesthetic is very different in some ways, and the customer base is different too,” she explains. “It’s not the customer we typically target at the Havenly brands—it’s a little bit older, a little bit more luxury-forward.” The opportunity, as she sees it, is to continue to service St. Frank’s existing fans while layering the brand’s products and aesthetic into its offerings for Havenly customers. “It’s fairly simple to take that design language and translate it slightly downmarket to our customers—that’s what we’ve been playing with.”

Following the acquisitions of The Inside, Interior Define and The Citizenry, this deal marks Havenly’s fourth purchase in two years. It follows what is by now a familiar playbook: A home brand in a state of mild-to-extreme distress seeks a buyer, and Havenly structures a deal that preserves assets but sheds liabilities, funding the transaction with a mix of equity, cash and the assumption of some existing debt.

These deals are both opportunistic, in that they capitalize on a tough market with many would-be sellers, and strategic, as they fit Mayer’s longer-term goal of assembling a group of millennial-focused, digitally savvy brands into a company with serious scale. (Havenly, which has raised tens of millions in venture capital, has its own investors to appease.)

The approach has its risks and awkward realities: Distressed companies don’t always escape their baggage with the stroke of a pen. Though Havenly was able to make good with the vast majority of Interior Define’s long-suffering customers, not all got their furniture, and some remain frustrated that the brand is operational under new ownership. Employees are let go as part of these transitions, vendors must suddenly confront a new partner, and structuring deals to shed debt means that not everyone emerges whole.

Mayer describes these as the side effects of a choppy market for home brands. “Pretty much any company that’s in the space is dealing with some underlying state of distress or [asking themselves], ‘What are we doing?’” she says. “One of the things that’s hard is it’s just where the market is. It’s where we unfortunately have to play.”

And despite the complexities of the landscape, Mayer has no intention of slowing down. “I would say every week I get 15 [potential deals in my inbox],” she says. “Every couple of weeks I find one that’s interesting enough to double-click into.”

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