A majority ownership of Timbuk2 Designs was acquired by private equity investors. Terms of the deal were not disclosed.
The equity investment is led by a new San Francisco private equity fund, VMG Equity Partners, and the Washington, D.C.-based fund, Capital Logic Partners. Debt financing is provided by the San Francisco branch of Bethesda, MD-based CapitalSource Finance LLC.
Investment advisory services were provided by North Point Advisors of
San Francisco. Timbuk2 remains independent and privately-held, and its
current CEO, Mark Dwight, will continue to lead the Company. Three
years ago, Dwight led a group of private investors and a local
institutional investor, Pacific Community Ventures, to purchase the
16-year-old company. Since then, Timbuk2 has reorganized its
operations, expanded its product offerings and distribution, and
achieved profitability. In the process, the Companys annual revenue
has more than tripled. “This is a proud moment in Timbuk2s history,”
said Dwight. “We have delivered a significant return to our initial
investors nearly four and a half times their original investment in
just three years. Our new investors provide the financial resources
and strategic marketing expertise to fuel our next big growth phase.”
Timbuk2 distributes its products worldwide through specialty retailers
in the outdoor, bicycle and personal computer markets including such
well-known retailers as REI, EMS and Apple. The Company was founded in
1989 by a San Francisco bicycle messenger, and is well-known for its
colorful, three-panel messenger bags which consumers can personalize
on the Companys “Build Your Own Bag” web site by selecting their own
color combinations. These custom bags are still manufactured in
Timbuk2s own factory located in the Mission District of San
Francisco. “We are very proud of our San Francisco heritage,” said
Dwight. “San Francisco is our home and the inspiration for our brand.”
Though the Company also manufactures products in China, Dwight says he
is committed to maintaining the San Francisco manufacturing presence.
“Our San Francisco factory is a novelty in the current age of
outsourcing and offshoring but we have carved-out a special niche
making high-quality custom bags.” Dwight says customization, efficient
manufacturing, and consumer-direct sales via the Internet allow the
Company to offset the high cost of labor in San Francisco.
The sale is not only good for investors, but employees as well. The
transaction triggers a significant cash bonus to Timbuk2s
non-management employees who all participate in the Companys Employee
Wealth Sharing Program. The program was established by Dwight and the
Companys previous majority investor, San Francisco-based Pacific
Community Ventures (PCV). “The Timbuk2 sale is a double-bottom line
home run,” said Eduardo Rallo, Managing Director at PCV and previous
Timbuk2 Board Member. “PCVs investors are receiving a
well-above-market return on their investment, while Timbuk2s
lower-income workers are sharing significantly in the financial upside
of the value they helped create.”
Dwight is especially proud of this aspect of the deal. “Our
company-wide wealth creation program rewards all of our employees for
their hard work and dedication over the past several years. We will
distribute more than $1M to 40 employees in a one-time bonus. This is
the type of event we typically associate with high-flying Silicon
Valley technology companies, and its proof that business success
comes in many forms in our vibrant Bay Area economy.” The cash payout
to each employee is based on a formula accounting for tenure, grade
level, annual salary, and performance, and can be as much as two-times
annual pay. Over half of the employees receiving the payout work in
factory and warehouse positions, and reside in low/moderate-income
(LMI) communities targeted by PCV, such as the Chinatown, Bayview,
Outer Mission, Hunters Point, and Richmond districts of San Francisco.
PCV will conduct on-site financial management workshops for employees
receiving cash payouts, to help them understand options for investing
and saving this money through programs such as the Companys 401(k)
retirement program, 529 ScholarShare education accounts, and other
personal investment vehicles.
For PCV the first community development investment fund on the West Coast the Timbuk2 sale represents an important milestone. “Investment funds are judged on the quality of their investments, and
the ability to secure financially successful exits,” said Penelope
Douglas, PCV co-founder and President. “This double-bottom line
success will have important implications for the credibility of the
Community Development Investment movement as a whole. This is proof
the model works.”
Dwight explains the latest financial transaction is an important
milestone for the Companys growth strategy. “Timbuk2 is poised for
continued success as a unique and authentic urban brand. Our new
financial backers provide access to the financial resources and
professional advisors required to fuel our next phase of growth,” said
Dwight. The Company will have a new board of directors, including
representatives from its new investors, plus Ken Pucker, COO of
Timberland, and Dennis Jenson, previous president of Burton Snowboards.
Over the past three years, Timbuk2 has evolved from its cult status as
a manufacturer of bags for professional messengers and select urban
dwellers, to an emerging lifestyle brand. Timbuk2 now has stocking
distributors in Canada, Japan and Europe, and is currently negotiating
with additional distributors in other countries.
Dwight has big plans for the brand. “Timbuk2 is an authentic urban
brand, with a distinctive San Francisco personality and broad market
appeal,” said Dwight. “We have great respect for our brand heritage
and the continued loyalty of our core customers. We are committed to
producing stylish, functional, high-quality bags and accessories for
everyday use and we look forward to making Timbuk2 an international
brand icon.”
“Were excited to invest with Company management and Capital Logic to
acquire Timbuk2. Its a dynamic company with a strong,
highly-motivated management team, and we look forward to working with
the team to build and expand the Timbuk2 brand,” said VMG partner, Ms.
Scott Elaine Case. “Were enthusiastic about Timbuk2s high quality
products and premium brand positioning, and we believe the Company has
tremendous upside”, added Capital Logic partner, Mike McKay. The new
investors certainly hope the Company is as successful over the next
several years as it has been in the previous three.
