VMG Equity Takes Star Turn With Debut Buyout Fund

Firm: VMG Equity Partners

Fund: VMG Equity Partners LP

Target: $300 million

Amount Raised: $325 million

Placement Agent: Park Hill Group

Legal Counsel: Mayer, Brown, Rowe & Maw

With its $325 million debut fund wrapped up last month, VMG Equity Partners plans to harness the star power of Hollywood in pursuit of lower mid-market consumer product deals.

Central to the strategy of the firm, formed in 2005 by former principals of The Shansby Group, now known as TSG Consumer Partners, is a joint venture with The Firm, one of Tinseltown’s top talent agencies. Under the alliance, VMG Equity will be able to call on The Firm’s roster of celebrities, writers and producers to promote its portfolio companies and inject sizzle into their brands, said Scott Elaine Case, a VMG Equity Managing Director. Picture, for example, a product made by a VMG Equity portfolio company ending up in the frequently photographed hands of Leonardo DiCaprio, Justin Timberlake, Kelly Clarkson or Cameron Diaz.

VMG Equity Partners will also get an exclusive first look at the new products and brands that are constantly being pitched to The Firm’s clients. Those early looks could become a source of deal flow for the firm, Case said. In return for its services, The Firm will enjoy a small slice of any carried interest generated by the fund. “The joint venture really is a secret sauce,” Case said.

The new firm forged its partnership with the talent agency via the connections of David Baram, a VMG Equity co-founder and former president and chief operating officer of The Firm. Baram has retained a role as an officer and director of the company. On the operational side of the firm, Baram is joined by Robert Schult, the former president and chief operating officer of Nestle USA, who most recently oversaw The Shansby Group’s food products investments. VMG Equity’s fourth founder and managing director is Michael Mauzé, also a veteran of The Shansby Group.

The firm had initially targeted a $300 million first-time fund but ended up capping VMG Equity Partners LP at $325 million after turning away some would-be investors, Case said. The firm plans to write equity checks of between $10 million and $30 million to take control of companies valued at between $10 million and $150 million. With co-investments from limited partners, the LBO shop can stretch to invest as much equity as $70 million in a single deal, Case said, adding that those kinds of transactions would be few.

VMG Equity, from offices in Los Angeles and San Francisco, is searching for consumer product companies operating in the lifestyle, wellness, food and beverage, personal care, pet and leisure industries. The firm has closed one deal so far, taking a control stake in Timbuk2, a maker of high-end bicycle messenger bags.—J.H.