- 50-store retailer started out as poster shop
- Family retaining “significant stake”
- Talks heated up a year ago
Buyouts was unable to learn the size of the investment, which was made by Brentwood Associates Private Equity V LP, a $260 million fund raised last year. Z Gallerie’s founders will retain a significant stake in the company, bought in a non-auction process, according to the source.
A Brentwood official said the firm had no comment.
(Update: Brentwood issued a press release this morning announcing the deal. The release noted that “Z Gallerie was advised by BMO Capital Markets, and its legal counsel was Skadden, Arps, Slate, Meagher & Flom LLP. Brentwood was represented by Greenberg Traurig LLP on the transaction and Kirkland & Ellis LLP on the debt financing. KKR’s credit business and KeyBanc Capital Markets Inc. provided debt financing supporting the acquisition.”)
A specialist in the consumer sector, Brentwood typically buys majority stakes in companies with $5 million to $40 million in EBITDA, with a sweet spot of $15 million to $30 million in EBITDA. The Z Gallerie transaction would fall within the latter range, the source said.
Negotiations between the owners of Z Gallerie and Brentwood heated up in the past year, but Brentwood firm had been in touch with the retailer as early as three years ago, according to the source.
Z Gallerie, a 35-year-old family business based in Gardena, Calif., was formed by three siblings, Joe Zeiden, Carole Malfatti and Mike Zeiden, who opened a poster shop and grew from there, according to the company’s website. Overall, the home decorating sector has been getting a lift from moderate U.S. economic growth and a real estate recovery in many parts of the country.
Z Gallerie operates on the West Coast, Texas, the Southeast and in a few Midwestern states, along with North Carolina and Virginia, but it has no presence in the Northeast.
The deal marks a busy stretch for Brentwood Associate that’s included the purchase of Marshall Retail Group in August and a deal for men’s footwear and leather goods maker Allen Edmonds in November. In addition, portfolio company Zoe’s Kitchen went public in April.
Senior executives at Brentwood include William Barnum, Anthony Choe, Roger Goddu, Steven Moore and Eric Reiter, all partners, as well as Rahul Aggarwal and Scott Staf, both managing directors.