Busy Irving Place In Deal For Dots

With its buy of Dots LLC, Irving Place Capital cemented its fifth deal since June 2010. But for Bob Glick, Dots’ founder and outgoing CEO, the sale represents his departure from a company he led for more than 20 years.

IPC, the former Bear Stearns Merchant Banking, said Jan. 6 that it had acquired Dots, of Glenwillow, Ohio, a fashion retailer that sells affordable clothing, such as $9 dresses or jeans for $27, to women aged 25 to 35. Financial terms were not disclosed. KeyBanc is providing financing.

The deal is the latest for Irving Place, a New York PE firm that acquired Alpha Packaging and Pets Supplies “Plus” in recent months. Inn January, Irving Place also announced it bought a majority of Lafayette Surgical Specialty Hospital and recapped National Surgical Hospital (Moody’s Investors Service assigned a B2 corporate family rating to National Surgical, including its pending $220 million loan package it will use to back Irving Place Capital’s investment. The rating outlook is stable, Moody’s said. Moody’s said the B2 rating reflects the fact that NSH will have “considerable” leverage follow IPC’s recap, with 5.4x adjusted debt to EBITDA. NSH recognized about $286 million in revenue for the 12 months ended Sept. 30, Moody’s said.).

Irving Place is currently investing from its third fund, IPC III, which raised $2.7 billion. It’s not clear how much of IPC III is invested. IPC executives declined comment.

With the sale to IPC, Rick Bunka, Dot’s former president, is taking Glick’s place. No job cuts or management changes are expected.

“It’s a bittersweet moment,” said Glick, 63. He declined to disclose any revenue for Dots but says the company is producing record sales and earnings.

Why did Glick sell all of the company to Irving Place? Dots, Glick says, is now in a position to build out its brands, to remodel its stores and to become a national firm (most of its 400 stores are located on the East, Southeast and Midwest but nothing on the West Coast, a spokeswoman says). A possible IPO may loom in the company’s future. But such endeavors require capital.

Dots could have accomplished much of these developments on its own, according to the departing CEO. “I never wanted to take on the risk that something would happen to the company and things wouldn’t work out for our 5,000 employees,” Glick says. “I’ve always operated in risk-averse fashion.”

Glick didn’t specifically comment on whether succession issues prompted a sale. He does have a son, Marc, who has worked for Dots for nine years and currently leads the retailer’s supply chain management. Marc, Glick says, has done an outstanding job with Dots, but “the timing wasn’t right for him to take the helm.”

Last summer, Dots began looking for a partner and hired Bank of America Merrill Lynch to run a process. The auction attracted several bidders, including private equity and strategics, Glick says. “I wanted the absolute right person to take the business, who would share our culture and who had a passion for our business model,” he says. “Far and away, John Howard and IPC were at the top of our list.”

Glick noted Irving Place’s long experience in retail. The New York-based buyout firm has invested in several retail companies including Aeropostale, 7 for All Mankind and Stuart Weitzman. In 2007, VF Corp. acquired 7 for All Mankind, including IPC’s stake, for $775 million. Irving Place, when it was Bear Stearns Merchant Banking, acquired Aeropostale in 1998 and took it public in 2002. IPC sold its 55 percent stake in Stuart Weitzman in 2010 to Jones Apparel Group for $180 million.

With Dots, IPC’s focus will be to remodel all the stores to one consistent brand image while accelerating growth and opening new properties. “[IPC’s] got the capital to do that,” Glick says. “Far more capital than we would have.”

Glick also decided not to retain a stake in Dots. “I’ve never been affiliated with something I didn’t have control of,” he says. “I felt it was best to give Dots a clean start. I know IPC will do a great job.”

The sale to IPC closed Monday and Glick is currently a free agent. He says he wants to focus on giving back to the Cleveland community and will be attending an ICR conference for consumer firms next week. “I will be on the lookout for opportunities,” Glick says.

BofA Merrill Lynch’s Lisa Clyde and Ryan Mash provided financial advice to Dots.