Pro-Line Corp. recently received a $5 million investment–with access to an additional $15 million-from Patricof & Co. Ventures Inc., a leading international private equity firm with offices in the U.S. and abroad.
Comer Cottrell, founder and CEO of the $68 million Dallas-based cosmetics and haircare manufacturer (No. 29 on the BE INDUSTRIAL/SERVICE 100 list), says he began seeking potential investors a little than a ago to increase the company’s sales nationally and internationally in order to seek acquisition opportunities. But to do that, a cash infusion was needed. "There have been quite a few acquisitions in our industry in recent months, and it appears that today bigger is better," says Cottrell.
Patricof (which manages funds valued at approximately $3.4 billion worldwide), was linked to Pro-Line with the assistance of NationsBanc Montgomery Securities, the BE 100s company’s investment advisor on the deal.
Cottrell says he selected Patricof from the 12 investment banking companies that expressed interest in his company when NationsBanc Montgomery began presenting the firm’s portfolio. Patricof, he says, is familiar with expanding companies and was already investing in similar types of growing businesses, including a vitamin company and a chain of stores that would be a source of distribution.
What really sold the Pro-Line president on Patricof, however, was the fact that the multibillion-dollar investment firm wasn’t interested in controlling his business; his management team could stay in place. This was key, given the flurry of acquisitions by majority-owned firms that have, of late, taken total dominance in the black haircare industry.
"We were only looking to work with an investment company in order to strengthen our position in the market and hopefully acquire some of the companies that are being sold," says Cottrell. "We want to ensure that there’s still black ownership in an industry that started out all black."
Pro-Line’s first acquisition attempt was to take over the New York-based African Pride. According to Cottrell, his company offered $50 million cash, which was $8 million the offer on the table. However, at the last minute, Revlon came in with a bid of $51 million and offered to keep the employees in place. Though it was a loss, Cottrell concedes that it was a good deal for African Pride because it gave them the opportunity to sell their company for $1 million more and keep their jobs.
David Landau, a principal at Patricof who spearheaded the transaction, says that his company has been proactively looking to invest in the growth of ethnic markets in the U.S. and internationally.
"Much of what we do is to support companies as they grow rapidly domestically, internationally and/or through acquisitions," says Landau. "Pro-Line has significant opportunities in each of these areas, so it was an excellent fit both strategically in terms of our companies and also our personal chemistry."
sales. David Landau says Patricof is targeting minority firms for investment