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Win Brands' MiHIGH deal reflects active lower middle market

Richard Collings
Aug 15, 2022
Illustration of two people shaking hands on a giant stack of money.
Illustration: Aïda Amer/Axios

Win Brands Group has acquired MiHIGH, a maker of infrared sauna blankets, President Eric Satler tells Axios, and the retail platform intends to continue acquisitions despite market turmoil.

Why it matters: Deal activity in the lower middle market is actually reaching new highs in 2022, both in terms of deal flow and valuations, according to M&A platform Axial.

  • Axial, which tracks targets with up to $250 million in revenue and up to $25 million in EBITDA, said that there was a 43% year-over-year increase in deals marketed in Q2.

Driving the news: MiHIGH will be tucked into Win's platform Gravity, a maker of weighted and wellness products, Satler says. Deal terms were not disclosed.

  • MiHIGH claims that its products provide a range of health benefits, from detoxification to calorie burning to clearer skin to muscle recovery.

Meanwhile, Win is in discussions with additional prospective targets, and seeks brands in the home, wellness, or sports and outdoors sectors with between $5 million and $50 million in revenue.

  • The company has also eyed targets above the $50 million revenue mark, Satler says
  • Brands under the $10 million revenue mark are bolt-ons, while acquisitions intended to be platforms are likely to have revenue above $20 million, he says.

By the numbers: Win generates more than $100 million in revenue, while each of its core brands average growth of around 20% per year (which is intentionally measured) and EBITDA margins of between 10% and 15%, Satler says.

  • In February, Win raised $40 million in a round led by PE firm Orangewood Partners to finance the purchase of outdoor lifestyle brand Love Your Melon.
  • That funding will support future M&A efforts.
  • In total, the company has raised $70 million in growth equity and secured a $50 million term loan from Oaktree Capital Management.

How it works: In addition to Gravity and Love Your Melon, brand platforms in Win's portfolio include Qalo, a maker of silicone products such as wedding rings for people who can't wear metal rings, and home fragrance brand Homesick.

The bottom line: The idea is to gather together a number of compelling brands under a single umbrella to create a multibillion-dollar opportunity, Satler says.

  • He notes how increasingly difficult it is for individual brands to scale between rising customer acquisition costs and supply chain issues.
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