Learn how to buy businesses in 5-minutes or less, once a week. Lessons & specific tactics on how invest your money and generate cash flow for your life.
π A luxury PE investment with a 5x return
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Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:
π How to turn $245 million into $1.3 billion When you think of Gucci, you probably think of a timeless and prestigious luxury brand. But I was surprised to learn that just a few decades ago, Gucci's future was uncertain and the Gucci family sold off the entirety of their stake to a private equity firm. Here's the story: Investcorp might not be a name you know, but you definitely know many of the companies they've owned: Tiffany & Co, Circle K convenience stores, and Jostens (the company that makes class rings and yearbooks).
Founded in 1982, Investcorp has built a reputation for superior performance and proven expertise across a diverse platform of asset classes. Our AUM has grown from $10 bn to over $53 bn in the past six years. β β- Investcorp's website In the 80s early 90s, Gucci was struggling with family disputes, declining brand image, and financial distress. The company was in huge trouble. The Gucci family sold 47% of the company to Investcorp in 1989, and four years later offloaded the rest of their stake to them. In total, Investcorp paid about $245 million for Gucci. Here was Gucci's problem at the time: The luxury brand was losing its allure as it started to sell cheaper items and licensed its brand to all sorts of other companies. Because the brand name was becoming diluted, the company was having trouble moving its higher-priced luxury goods. Plus, infighting among the Gucci family clouded the strategic direction of the business.
In the 1990s, Gucci faced a period of significant struggle marked by internal conflicts, quality issues, and a decline in brand image. The brand's products had become associated with gaudy designs and were losing favor with consumers. A major turning point came with the arrival of Tom Ford as Creative Director in 1994, who revitalized the brand with his bold, sensual, and modern designs.
Investcorp quickly turned the business around. They took control of the company and set a clear strategic direction: Restore Gucci's exclusive, luxurious brand feel. They cut cheap products and ended many licensing agreements. And they made a few key hires. Here's a summary of the key actions that turned the business around:
Investcorp's Return In classic private equity fashion, Investcorp looked to cash out after a few years. The company was now massively more valuable than it was at acquisition. Gucci did $230 million in revenue in 1993 (the year Investcorp took majority ownership). They doubled that in just two years, bringing in $500 million in revenue and a company record $83 million in profit. For reference, Gucci did about $8 billion in revenue last year. They took Gucci public in 1995 and gradually sold shares for a total of $1.3 billion, or a 5.3x return in just a few short years. Lessons Learned:
π How to Build an Empire Want to make $15 million a month driving diesel fuel across Texas? Bryan started a business doing it. But it wasn't easy - he had to pay for the diesel the day after he picked it up, but customers didn't pay for 30 days. He had to finance the orders out of his own pocket, all while hoping that his customers in a volatile industry didn't got bankrupt in the meantime. Bryan shared some amazing stories with me during our chat. If you want to understand how to build a great holding company, listen to this. βWatch on YouTubeβ βListen on Spotifyβ βListen on Apple Podcastsβ πWe bought a hotel for $23 million In case you missed it, a few weeks ago I wrote about a hotel in Montauk, NY we bought and remodeled. If you haven't seen it yet, give it a read on X. We paid $23 million and put a bunch more money into fixing it up - and I shared the whole process in this post. β
Have a great day, Sieva P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor) What did you think of today's newsletter? Rate this newsletter using the poll below: β Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning. β β β |
Sieva Kozinsky
Learn how to buy businesses in 5-minutes or less, once a week. Lessons & specific tactics on how invest your money and generate cash flow for your life.
Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today: They made $20 billion buying Burger King. Let's study their strategy Avoid this fatal mistake when buying a business How do you buy $5 billion worth of real estate? I'll show you π Learn to buy companies like 3G Capital These guys are one of my biggest inspirations. 3G Capital isn't nearly as famous a name as Berkshire Hathaway, but they have a similar approach (and even worked together on...
Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today: How to buy companies like the pros He built a portfolio of 190 apartment buildings π How to buy companies like a private equity firm Want to buy businesses like a multi-billion dollar PE firm? I'm going to break it down for you. One of the most common private equity strategies is acquiring a platform company, and then acquiring other complementary businesses to grow the group of businesses...
Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today: We bought a hotel in Montauk Don't make this mistake when buying a business He's rolling up auto shops...and doing $150 million+ per year π I did something a little crazy. Not many know Iβve been working on this for the past 2 years. I bought a hotel in Montauk, NY, for $23 million. I'll jump into the numbers and business plan in a minute. But first I want to tell you about what makes this...