Mad Engine, a manufacturer, wholesaler and distributor of licensed, private label and branded apparel and accessories, is now under new majority ownership.
Global investment firm Platinum Equity said it has acquired a controlling stake in Mad Engine from affiliates of the company’s current ownership group, Mad Engine LLC, which has owned the business since 2011. Neither the percentage stake acquired or the financial terms of the transaction have been disclosed.
Mad Engine’s existing shareholders and management have retained a “meaningful” equity interest and will continue to serve in leadership roles, the company said in a statement.
Founded in 1987, Mad Engine produces, designs and sells apparel and accessories with licenses from more than 100 brands, including many of pop culture’s hottest labels, including Marvel, Star Wars, Disney, Fortnite, Netflix, Warner Bros., Coca-Cola and Nickelodeon.
The company also owns brands include streetwear apparel company Lifted Research Group (LRG), beanie brand Neff Headwear and pop-culture apparel brand Mighty Fine and manufactures “Mad Merch” clothing lines for social media influencers.
In recent years, Mad Engine has expanded, acquiring Canada-based licensed apparel supplier Xtreme Worldwide in 2014 to expand internationally before scooping up LRG and then Neff in 2017 to enter into branded apparel sales. In 2018, Mad Engine bought Mighty Fine to move into the children’s apparel market.
As Mad Engine has grown, it has expanded beyond men’s and boy’s T-shirts to include fashion tops and bottoms, denim, dresses, outerwear, pajamas, underwear, hats and beanies, backpacks, purses, watches, and sunglasses across a wide spectrum of categories and geographies.
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With a deal, it appears the apparel licensor feels its next stage of growth can be accelerated with the help of outside capital. In a statement, Mad Engine CEO Danish Gajiani described Platinum Equity as the “perfect partner” for the apparel company due to its “fervent desire” to grow the business.
Platinum Equity partner Jacob Kotzubei said Mad Engine was a “well-established, scalable platform operating in a highly fragmented industry, which creates a perfect opportunity to continue investing in and growing the business.”
Mad Engine maintains a significant wholesale presence, with products currently sold through retail partners including Walmart, Target, Old Navy, Kohl’s and J.C. Penney, in addition to specialty retailers, e-commerce sites and other outlets, and independent boutiques. The company manufactures private-label goods for Walmart, Target, American Eagle Outfitters and Zumiez.
The manufacturer operates under a vertically integrated model, boasting 112 knitting machines, 21 dyeing machines and four automated cutting machines, alongside sewing and screen printing capabilities, with the latter producing 3 million units of clothing per month.
The San Diego-based Mad Engine also operates six design centers globally and a showroom in Manhattan. Its sourcing network spans the U.S., Canada, Mexico, China, India, Bangladesh, Cambodia, Egypt, El Salvador, Guatemala, Honduras, Nicaragua, Oman, Pakistan and Vietnam.
The Mad Engine deal represents the seventh platform investment by Platinum Equity’s Small Cap Fund, a $1.5 billion buyout fund focused on investment opportunities in the lower middle market.
In 2020 alone, the fund has completed five investments, with the latest coming in December when Platinum Equity announced it had acquired technology distributor Ingram Micro for $7.2 billion.
Ingram Micro’s Commerce and Lifecycle Services branch offers a multi-location warehousing solution that includes supply chain capabilities such as direct-to-consumer fulfillment, retail fulfillment, transportation management, cross-border commerce and a custom returns solution—all which could complete the wide network Mad Engine operates.
“Platinum has a lot of experience working with businesses like ours and will provide us strategic, financial and operational support, enabling us to pursue an ambitious new phase of growth and expansion,” added Mad Engine president and chief operating officer Faizan Bakali. “This partnership with Platinum gives us tremendous strength as we continue to serve our retailers, licensor partners and, ultimately, the end consumer.”
Gibson, Dunn & Crutcher LLP served as Platinum Equity’s legal counsel on the acquisition of Mad Engine. Buchalter represented Mad Engine. Lincoln International acted as the exclusive investment banking representative for Mad Engine. Wells Fargo Capital Finance is supporting the transaction and will remain the company’s lending partner.