Having embarked on the entrepreneurial journey over a year ago has exposed me to a different world. Part of that world has been engaging with potential investors for my business ventures. This phase has inspired me to ask questions and conduct some research on the topic. The thought took me back to a few years back, when one of my biggest inspirations in being a fabulous businesswoman, Kimora-Lee Simmons starred in her own Style Network reality series, ‘Life In The Fab Lane’ in 2007. The show followed the former model, designer and all round glamazon’s daily life, while showcasing her as she juggled her various businesses and motherhood with her love life with then husband, Djimon Hounsou and relationship with first husband, rap mogul, Russell Simmons.
On the show, we would witness Simmons in her element as the Creative Director of her fashion line, Baby Phat, an extension of Russell’s Phat Farm label, under his Phat Fashions business. The brands were sold to clothing producers Kellwood in 2004 for a reported $140 million, a deal which included performance incentives and Kimora was retained to uphold the spirit and continuity of the brands. In 2010, Kimora was “unceremoniously dumped” from Baby Phat. “Baby Phat is like one of my children, I didn’t (want to) leave. It was all a surprise to me,” she said of her ousting. A Baby Phat insider also told Page Six, “Kimora was going over-budget. She’d pay herself a fee to be in the ads, plus she paid her children fees to appear in ads. It costs thousands of dollars to airbrush her because she’s a size 10. Plus, they spent a ton of money on body doubles. They would shoot another model in the clothes, and take Kimora’s head and put in on her body.”
One of the most prominent luxury shoe brands, Jimmy Choo Ltd was founded in 1996 in a partnership between Tamara Mellon, then British Vogue’s accessories editor, and Malaysian couture cobbler Jimmy Choo. Mellon secured a £150,000 loan from her father to go into business with Choo, with the first products sold under the Jimmy Choo line. Most of us learned about the brand after it was immortalised in the TV show Sex and the City, when Sarah Jessica Parker’s character Carrie revealed it was her favourite store. In April 2001 Mr Choo sold his 50% share in the ready-to-wear business to Equinox Luxury Holdings Ltd for £10 million. Lion Capital went on to acquire a majority shareholding in Jimmy Choo Ltd in November 2004. The company was later sold in 2007 to TowerBrook Capital Partners for £225 million, with Mellon retaining a number of shares. Labelux, the current owners, acquired the brand for £525.5 million in 2011 with J.Choo Limited remaining the company name throughout, with Tamara staying on in a creative consultancy role. She has since severed all ties with the brand. This week, it was reported that the brand is once again up for sale.
“Going through so many private equity deals. In 2001 Jimmy decided he wanted to sell his shares to a private equity firm. I just rolled my shares into the new deal. We had such incredible growth and we made so much money at Jimmy Choo that every two or three years, the firms wanted to sell their shares and a new company would come in. It increased the value of my shares but we had to meet with potential buyers and it took my eye off my day-to-day job. Then every two to three years, to have a new partner and a new board filled with people who do not know really understand the business, is really difficult. They didn’t have a long-term view. They just wanted to get out and make money,” she exclusively opened up to Forbes. “In the end I left. There were no women in private equity. I never had women on my board. There was no one who really understood the product. When you have people who are only in the business for the short term, they underpay people, they burn everyone, because they won’t be there in a few years. After the fourth deal I was burned out”.
Karen Millen founded her business, a women’s clothing stall, in 1983 with then husband Kevin Stanford. Together, they opened a chain of shops that traded under the name Karen Millen. In 2004, Millen agreed to a share purchase agreement (SPA) with an Icelandic consortium, funded by Icelandic bank Kaupthing and led by the investment group Baugur, which would go on to buy Karen Millen later that year. Unfortunately for Ms Millen, the SPA contains a number of covenants related to Karen Millen’s (the person) future conduct including clause 5.1.7, which states that Millen is not permitted to use the name ‘Karen Millen’, ‘KM’ and ‘K Millen’ or any other confusingly similar name in the US and China. Millen the woman says she is embarrassed by the brand. But the chain she relinquished control of in 2004 has threatened legal action if she returns to business, as planned, under the brand name Karen or KM. “I never wear the clothes. Karen Millen is just a brand of clothing and does not reflect me as a person in any way… Sometimes I find it a little difficult as I have no control over what they design and at times it can be a little embarrassing,” Millen said.
Another businesswoman that started a brand that they are no longer affiliated with is Bobbi Brown, the founder and ex-Chief Creative Officer of Bobbi Brown Cosmetics. Estée Lauder Companies Inc. bought Bobbi Brown Essentials in 1995; Brown retained complete creative control of the makeup line. In December 2016, it was announced that Brown would step down from the company by the end of the year. Media Mogul Khanyi Dhlomo is rumoured to have sold her Luminance shares, a year after she gleefully launched the luxury fashion store at the lush Hyde Park Mall in Johannesburg in 2013. Of course, not all brand acquisitions turn out badly, and it is an approach worth consideration.
Images: Jimmy Choo/Style Network/BobbiBrown/KarenMillen