Private equity investor Cortec Group completed its acquisition of Dr. Leonard’s Healthcare Group on May 24, buying the multititle cataloger for a reported $240 million, or about nine times earnings before income, taxes, depreciation, and amortization (EBITDA).
Since the two parties agreed to the deal in March, Cortec has been searching for a replacement for president/CEO and major shareholder Stephen Brotman, who will leave the company this summer. “We’re at the top of our game,” Brotman says. “Earnings for our fiscal year ending this July are up by more than 40% and should continue at that pace. I’m very happy to be leaving the company at a time when it’s doing so well.”
Brotman says that the $260 million company, which operates the Dr. Leonard’s and Carol Wright Gifts catalogs, as well as a co-branded catalog with Brylane’s Roaman’s property, “is poised for further acquisitions. It has the money and infrastructure to handle other quality catalog companies and will be actively looking,” he says.
When Brotman bought the company in 1992, annual sales were $19 million. They’ve grown an average of 35% a year since. “The company is a premier property, with good growth and large operating margins,” says Mike Petsky, CEO of New York-based investment bank Petsky Prunier. Petsky notes that in comparison to other recent catalog acquisitions, which have been commanding four to six times EBITDA, Dr. Leonard’s is something of an anomoly.