THE DIVESTMENT CAMPAIGN
Our Client – The Vendor
Established in 2013, Yellow Octopus quickly became one of Australia’s leading brands in the online giftware space. The award-winning Business offers a vast, ever-evolving range of cool, inspirational, quirky, and fun products through its user-friendly website and Melbourne-based storefront. Its core strength is the ability to source unique and hard-to-find products and market them effectively to online consumers. A consistent focus on digital marketing has drawn high levels of Internet traffic to the website; while a commitment to high service standards drives positive online reviews and endorsements. Strong growth since inception saw Yellow Octopus build a large customer-base of +185k predominantly female consumers, with transaction volumes increasing ten-fold to FY18. Over the same period, sales growth surpassed the annualised growth rate of the online shopping sector as a whole, and earnings consistently improved year-on-year.
Having built the Business over a short period of time into a fast-growth profitable concern, Yellow Octopus’ director engaged Johnsons Corporate to conduct an international sales campaign. The objective was to find a strategic acquirer with the capital and resources to help take the Business to the next level – deepening its market penetration, broadening its product range, and building stronger footholds in the high-growth youth and high-margin corporate segments.
The International Sales Strategy
For potential acquirers, this Business represented an attractive opportunity. With its established footprint in Australia and recent entry into the New Zealand market, Yellow Octopus appealed to buyers seeking to leverage a fast-growth niche product offering and/or a recognised online brand with a loyal following of 26-45-year-old female consumers.
Johnsons Corporate’s custom research & marketing focused on Australian and international online retailers of toys, gifts and homewares. In addition, Johnsons commissioned secondary research spanning the Australian market and including traditional retailers and wholesalers of the same product categories as well as the resellers of promotional merchandise and general online retailers. A proactive direct marketing campaign generated high levels of interest from a mix of parties, with Johnsons taking a hands-on approach to screening prospective acquirers and negotiating with qualified parties. In the face of Covid-related challenges to the business environment, which saw an initial front-running buyer withdraw from the sales process, Johnsons was able to secure Offer & Acceptance within 19 weeks of reinitiating conversations with back-up buyers.
The Synergistic Trade Buyer
Backed by an international private equity firm, Marlin Brands owns and manages a portfolio of consumer durable businesses with a focus on the living, gifting and convenience segments. Wholesaling to major and independent retailers, its products are found in over 15,000 outlets across Australia. This acquisition adds a complementary range of products to its portfolio, while also creating new retail revenue streams.
What Our Client Had to Say
"Navigating the sale of Yellow Octopus to an overseas-backed private equity firm several-hundred times larger than my business was challenging, but ultimately very fruitful. However, I simply would not have been able to successfully traverse the sale process without the expertise and guidance from Johnsons Corporate. They are not simply business brokers, but first and foremost, highly experienced business advisors. They take the time to understand your business, help maximise your company valuation and leave no stone unturned in helping you find the right buyer – and ultimately achieving a great result."Derek Sheen - Director - Yellow Octopus