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Society Brands outlines M&A strategy

Richard Collings
Jul 28, 2022
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Illustration: Brendan Lynch/Axios

Society Brands, an Amazon and e-commerce aggregator, is seeking acquisitions of sellers of essential products headed into the second half of the year, says CEO Michael Sirpilla.

Why it's the BFD: The Canton, Ohio-based company is bullish on the Amazon aggregation strategy, despite recent speculation about whether dealmaking in the space is slowing or the aggregation bubble is bursting.

What they're saying: "We need to take it on a case-by-case basis," Sirpilla tells Richard. "We just need to be really prudent when we're looking at assets to acquire."

By the numbers: Society Brands aims to buy around 12 to 15 brands per year, at a clip of one to two acquisitions a month, Sirpilla says.

  • Ideal targets generate annual revenue of $1 million to $20 million, with profit margins between 15% and 25%.
  • Other metrics include being at least five years old, having more than 5,000 customer reviews and having a minimum 4.5-star rating.
  • Valuation multiples are typically between 4x and 6x EBITDA.

State of play: Buys will be financed from the company's March $204 million capital raise, led by i80 Group.

  • "It was good that we raised the capital when we did," he says, citing the company's "founder-friendly" business model as a draw for investors.
  • The company has already scooped up three brands, including Damn Near Kilt 'Em, all of which are growing 40% year over year on average, Sirpilla says.

What's next: "When you’re performing an M&A strategy, capital is always on the front of mind," Sirpilla says. "And you always need to be thinking about, 'How quickly am I deploying the capital that we've already raised? Am I being a good steward?'"

  • Alongside its aggressive acquisition strategy, Society Brands foresees additional fundraises, Sirpilla says, declining to elaborate on timing.

The big picture: Even though the company is focused on e-commerce in the near term, it eventually aims to pursue an omnichannel retail strategy, Sirpilla says.

  • That includes taking the brands international and some brands may get their own physical stores.
  • "For the right brands, brick and mortar will be the right fit," he adds.
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