Bregal Partners Wants to Invest $100M in Enthusiast Brands This Year

“Ultimately we may have other co-investors in this, so $100 million of equity would bring $500 million to acquire companies,” Bergmann told Sports Executive Weekly Tuesday in a telephone interview from Santa Monica, CA, where he was attending the Imperial Capital Consumer Summit. “I hope we'd have a good chunk of that deployed by end of the year.”

 

Bergmann said the investments will be in addition to the undisclosed investment Bregal made to acquire control of Shock Doctor last month from Norwest Equity Partners. Bergmann named his long-time colleague and veteran sporting goods executive Michael Magerman to spearhead the effort.

 

The private equity firm is targeting companies with strong management teams that own authentic brands that “resonate with passionate and highly-involved consumers.”  That includes companies that make products that cater to athletes, campers, cyclists, hikers, foodies, musicians, health and wellness buffs or any other group of enthusiasts.

 

 

“We think niche businesses in those types of categories are great businesses,” said Magerman. “They have strong independent specialty distribution, great margins and tremendous innovation. You can look at any one of those vertical sand will see great opportunities.”

 

Magerman, pictured at left, said he looks for brands with customers that exhibit ‘tribal behavior,’ such as cyclists.

 

 

“We see the incredible amount of energy people who ride bikes put into the apparel, parts and accessories they buy,” he said.

 

 

Bregal has been scouting opportunities in bow hunting, musical instruments and men’s activewear, where it sees an opportunity to create a Lululemon for men in the 30-to-50 demographic, said Bergmann.
 

“There are some brands targeting that on women's side,” said Bergmann. “We see some opportunities to target that on the men's side.”

 

 

Two major trends Magerman sees driving opportunity and value are the crossover of technical apparel into fashion and health care reform.

 

 

“The decision around health care is increasingly a decision being made by consumers because they are paying more out of pocket for both products and services and that is only going to accelerate,” he said. “Ultimately, there will be an ability for people and medical professionals to track people's health remotely, which will change the way insurers think about the population. For instance, if you are looking for health insurance and check off you are a smoker that will very clearly affect your premium. People willing to have their activities monitored will have access to lower premiums. This will push a lot of physical therapy into the consumer’s hand and the ability to be player in that is enormous. That is one of the reasons we invested in Shock Doctor.”

 

 

Magerman and Bergmann began working together in 1999, two years after Magerman sold his golf products company Odyssey Sports. That year, while working as a managing director of Centre Partners, Bergmann recruited Magerman to take the CEO position at Bravo Sports. Magerman left that post a year later after recruiting current Shock Doctor CEO Anthony Armand to take his place. After a two year stint as a senior director, Centre Partners named Magerman CEO in 2005 at another portfolio company; Quickie Manufacturing. Centre sold Quickie to Jarden Corporation in 2010, the same year Armand left Bravo Sports to take the CEO role at Shock Doctor.

 

 

Bergmann, meanwhile, left Centre Partners in 2012 to help launch Bregal Partners for Bregal Investments, the investment arm of Cofra Holding AG, a Swiss conglomerate that owns the 1,800-store C&A retail chain and a multi-billion portfolio of European real estate. Based in New York City, Bregal Partners focuses on middle market companies in the Consumer, Food and Retail; Energy Services and Healthcare sectors. It typically invests $25-$75 million in equity, and up to $150 million with other Bregal Investments investors, in companies with strong management teams that generate $10 million to $75 million or more in EBITDA.

 

 

Magerman signed on as a senior advisor at Bregal in December, 2013 after relinquishing the CEO spot at Quickie. He has since been helping Bergmann scout and vet potential targets, including Shock Doctor, where both men now serve as directors. While best known on the team side for its mouth guards, Shock Doctor makes a growing number of protective and therapeutic products for athletes and recently acquired the Cutter sports glove brand.
 

Magerman’s resume also includes stints as CEO of Tommy Armour Golf and Marc Scot Apparel. He holds two patents on the design and technology of inserts for golf putters, has been recognized as a Top 100 Marketer in the United States by Advertising Age and won a Gold Effie from the New York Advertisers Association. He holds a BA in Political Science from UCLA and an MBA from the University of San Diego.