GB Merchant Partners, the private equity arm of Gordon Brothers Group, acquired Spencer Gifts from Vivendi in 2003. Up to that point, Spencer was severely neglected by a media industry parent with little understanding of retail and no interest in investing in the brand. With strong support from its new owners, Spencer Gifts launched an aggressive program to revitalize the company, add stores, grow sales and enhance the value of the Spencer’s and Spirit Halloween brands.

Their efforts to turn the company around were so successful that GB Merchant decided to capture the accrued value of its investment by selling Spencer Gifts in 2007.  The Spencer Gifts management team viewed the company as being in the “third inning of a nine-inning ballgame.”  They wanted to stay in the game and lead the turnaround effort by acquiring the company, with the support of ACON Investments, a private investment equity firm.

To finance the acquisition, the new ACON-management partnership needed a financial services provider with a solid understanding of both retail industry dynamics and the unique Spencer Gifts business model, including the seasonal nature of the rapidly growing Spirit Halloween business.

Gordon Brothers Group and its principals have long-standing relationships with the Retail Finance Group of CIT Commercial & Industrial.  CIT is a leading provider of a wide range of financial solutions for the retail industry; the company has extensive experience in mergers and acquisitions, divestitures and management buyouts.

When CIT learned that GB Merchant wanted to sell Spencer Gifts, members of the Retail Finance team offered to work with the potential buyer on acquisition financing.  Because of its extensive retail experience and familiarity with the company, CIT knew Spencer Gifts had a proven management team, a strong four-year track record, and an innovative business model that competitors find hard to duplicate.

While many traditional lenders are wary of financing seasonal businesses, the CIT team understood the strength of the Spirit Halloween brand and the phenomenal upward trend in consumer spending on Halloween products in recent years.    

Retail industry specialists from CIT created an innovative financing solution that enabled ACON to finance the acquisition and Spencer Gifts’ management to continue to run the company.

Acquisition of Spencer Gifts by ACON and a management team led by CEO Steven Silverstein was completed in August 2007.  CIT and Laminar Direct Capital led a group of lenders that provided a $120 million asset-based credit facility and a $52 million term loan. The terms recognize the seasonality of the company’s business and provide the flexibility the company needs to achieve its ambitious growth objectives.

Spencer’s stores are adding different types of merchandise, designed to appeal to a broader base of potential customers.  In addition, the company is testing new store concepts at four U.S. locations that “mix influences from urban industrialism with a nightclub atmosphere.” 

The company also has aggressive growth plans for its market-leading Spirit Halloween concept, including growth from a current base of 500 stores in 46 states that makes the company the leading national Halloween retailer.