People like to look their best, and they’re willing to pay for it. And even though luxury beauty products are exactly what the name implies they are-luxuries-many consumers decidedly treat them like necessities. Hence D’Arcy Laboratories, which is dedicated exclusively to creating and marketing specialized, high-end beauty products, and which has reportedly experienced exponential growth throughout the last decade.
Recognizing the opportunities, Florida-based Palm Beach Capital Partners recently massaged D’Arcy into its portfolio through an all-equity investment.
“The attractiveness of this investment stemmed from D’Arcy’s established record of high-volume sales and the quality of its management team,” said Shaun McGruder, a Palm Beach managing director.
D’Arcy was founded in 1979 and is based in Pompano Beach, Fla. The company prides itself as being a pioneer in technologically-advanced skin- and hair-care formulas for the luxury market, using micro-manufacturing guidelines to produce products for what it deems as “elite consumers” as well as to retail end markets in the beauty industry business. Among others, the company sells products under the D’Arcy and Sassy Girl skin- and hair-care brands. D’Arcy also touts being the co-creator of Peter Coppola New York designer hair-care products and Hello Beautiful professional skin care and cosmetics.
“We feel that D’Arcy’s rigid manufacturing standards and extraordinary products give it a tremendous advantage over its competitors,” McGruder said. “This company is poised for dramatic growth in the near future.”
Indeed, the company has already seen its fair share of growth. D’Arcy’s revenues are reportedly 173x greater than they were little more than a decade ago. Thirteen years ago, D’Arcy’s revenues were said to be about $75,000 per annum, whereas last year the company took in approximately $13 million. It is precisely that sort of growth that both the firm and the company hope to continue through product expansion and increases in D’Arcy’s customer base.
Though terms of the transaction were not disclosed, Palm Beach Capital, which typically looks for deals in its home state, generally invests in small-market companies with total enterprise values between $5 million and $100 million.
The firm is currently investing out of its inaugural vehicle, Palm Beach Capital Fund I LP, which closed on a total of $60 million in March 2003. The firm’s goal is to invest in eight to 15 companies throughout the fund’s investment period, ranging from $1 million to $12 million in equity per transaction. Average equity commitments fall between $3 million and $6 million, according to the firm’s Website.
Palm Beach Capital has been keeping busy at the small end of the market this year, working both its exit and acquisition games. In April, the firm sold its equity stake in DVD and VHS movie distributor Entertainment Resources Inc. to Chicago-based PE firm Glencoe Capital. Additionally, Palm Beach exited Access Diabetic Supply in February, and in January, the firm sold Universal Folding Box to Standard Folding Cartons.
On the acquisition front, Palm Beach made undisclosed investments in Furniture Service Industries Inc., a home furnishing protection and services company, and CAPRI Engineering Inc. an engineering firm with 10 locations around the state of Florida. Both investments were announced in May.