Pura Vida Acquired For $75 Million
“This is a true American success story in which two guys came up with an idea, had a reliable vendor, used creative marketing and worked extremely hard to build an incredible business. As they grew the business they realized they reached a point where they needed to bring in a buyer to help them take their business to the next level. They followed the right course in finding their buyer and future partner.” commented Sam Thompson, a Minneapolis business broker and President of Transitions In Business. “Excellent story!”
Griffin Thall and Paul Goodman, two Southern California friends traveling through Costa Rica on a post-college graduation trip in 2010, crossed paths with two bracelet artisans, Jorge and Joaquin, who were living in poverty. Jorge and Joaquin made beautiful, colorful handmade bracelets that seemed to capture the essence of their journey. Thall and Goodman asked the artisans to make 400 bracelets to take home with them.
Upon returning to San Diego, the partners got to work selling their bracelets. They built a simple website and took orders online. They promoted their lifestyle brand on social media and got well known influencers to ware their bracelets.
Over the next nine years, the partners-built Pura Vida into a $68 million company with supply continuing to come from Jorge and Joaquin who now employ more than 1,000 people. The amazing growth of Pura Vida culminated in a sale process which attracted 25 bidders in 2019.
Twenty two of the 25 suitors were from private equity groups while three were from strategic acquirers (i.e. other brands). After a round of management meetings, six of the private equity groups and one strategic acquirer made formal offers.
As is often the case, the bids from private equity were focused on the numbers and required the partners put a larger share of their money “at risk” based on the future performance of the company. By contrast, Vera Bradley was willing to pay roughly 75% of the money up front and offered the partners years of experience building lasting brands.
In July 2019 Vera Bradley announced their acquisition of a 75% stake in Pura Vida Bracelets for $75 million in cash plus a $22.5 million earn out which equates to a little more than 9 times that year’s adjusted EBITDA.
Listen to the entire episode and learn:
- How Thall & Goodman created a subscription model (and why it worked)
- How the partners built a brand ambassador program on campuses across America eventually topping out at more than 100,000 guerilla marketers promoting the brand
- The typical differences between an offer from a private equity group and strategic acquirer
- The trophy Thall bought himself after the sale
- How to create a persona to help employees imagine their customer