Yellow Wood Partners partner Dana Schmaltz. Photo: Courtesy of Yellow Wood Partners
Yellow Wood Partners is hungry for corporate carveouts.
Driving the news: The firm's $1 billion deal for parts of Nestlé's vitamin, minerals, and supplement business — including the Nature's Bounty brand — will mark its sixth carveout.
- Nature's Bounty will join household staples Q-tips and Suave (each acquired from Unilever); ChapStick (Haleon); and Dr. Scholl's (Bayer in the Americas and Reckkitt internationally).
Axios spoke with Yellow Wood's partner Dana Schmaltz about the firm's VMS ambitions.
Editor's note: This interview was edited for length and clarity.
Axios Pro: A lot of the supplement story is around new premium companies. Why did you feel comfortable leaning into a legacy brand like Nature's Bounty?
- Dana Schmaltz: "This has been a sector we've been trying to get into for five years. We've looked at many of those smaller, faster-growing DTC [companies], probably 25 over the last five years. We never found one we felt comfortable making a platform for.
- Yes, it's a legacy brand, but it's an enormous brand with huge shelf space, with huge consumer trust.
- Thorne is a phenomenal business with a phenomenal product, but a lot of America can't afford Thorne. Those Americans still want to be healthy. They're still following the overall wellness trend here.
What can Yellow Wood do with Nature's Bounty and these brands that Nestlé couldn't?
- "Speed, innovation. ... [Nature's Bounty] does not have a creatine SKU, for example. That's just one example of a trending product which didn't make it through the innovation funnel at Nestle."
Does the portfolio belong together, or could you ultimately prune or sell individual assets?
- "It's always an option."
Yellow Wood seems to be buying more than they're exiting, so how do they guarantee returns for LPs?
- "Nobody can guarantee returns. When we do these carveouts, they take time.
- Dr. Scholl's, that was two carveouts. We bought the Americas business from Bayer. In Europe, it was a different product in Italy and Germany, different marketing in France and the U.K.
- Operationally, we had to put Humpty Dumpty back together again, and that takes a long time.
- Now, we've got a $460 million global brand that last year grew 6%."
