All-Star Possible sale of Varsity Brands ($6 billion valuation) 🧐

[TheCheerBuzz]

According to Reuters, Bain Capital (the investment firm that owns Varsity Brands) is thinking about selling or taking Varsity Brands public through an “initial public offering” (IPO), aiming for a valuation of more than $6 billion.

Yes, you read that right - that’s billion with a b!

As explained by Forbes, “In an IPO, a privately owned company lists its shares on a stock exchange, making them available for purchase by the general public.”

According to the Reuters article, this move follows a trend where private equity firms (like Bain Capital) are looking to exit from apparel businesses, as seen in recent IPOs and sales.

Also mentioned in the article:

“Varsity Brands generates more than $400 million in 12-month earnings before interest, taxes, depreciation and amortization, the sources added, asking not to be identified because the matter is confidential.“

Our Twitter (we refuse to call it ‘X‘) thread on the topics sparked a few comments & thoughts - click here to see.

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[catlady]

The key point is it generates $400 million BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION. The SGB media report dated Feb. 9, 2023 is reality versus the creative financing stated in the above article that doesn't remove all expenses. (article):

“Varsity’s operating performance has improved, but its credit metrics and free operating cash flow (FOCF) are trending below our expectations.

“We estimate the company’s FOCF will at least reach break-even in 2023 supported by a normalization of its working capital, top-line growth, and margin expansion.”