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Crafty Apes - Agile Dealmaking Brings Private Equity Investment to Innovative Company

FocalPoint advised Crafty Apes in its recapitalizion by Gemspring Capital

FocalPoint worked to educate investors on the complexities of the controversial “heartbeat” abortion bill, resulting in the submission of numerous attractive proposals, all of which were at substantial valuation increases (nearly 100%) to the Company’s unsolicited proposals received just a couple months prior.

Transaction

Headquartered in Los Angeles, with offices in Atlanta and New York, Crafty Apes (“Crafty” or the “Company”) is a leading tech-enabled service provider within one of the most profitable segments in the visual effects space: 2D compositing.

After receiving several unsolicited acquisition proposals, the Company engaged FocalPoint to evaluate its strategic alternatives and to eventually run a broader marketing process with the goal of increasing the valuation and identifying the right partner to help the Company continue its impressive historical growth trajectory.

Deal Challenges

The visual effects industry was undergoing a fundamental shift, from one that was marked by high-profile bankruptcies to one that has been benefiting from the massive demand for streaming content, like Netflix, Disney, and Apple. The Company’s largest office in Atlanta, Georgia was the subject of political news headlines during the marketing phase of the process, due to a controversial abortion bill that threatened to move a significant portion of content production out of Atlanta. Under an LOI, a buyer broke exclusivity after a third-party diligence industry report yielded a tepid view on future acquisitions.

Solution

FocalPoint had extensive experience in the visual effects and broader post-production industry and articulated how the industry had shifted to one that had sustained growth potential and exciting industry dynamics. After losing one of the lead bidders in the process after entering exclusivity, FocalPoint executed a seamless transition to one of the other lead bidders in the process. FocalPoint bankers understood this was a remote possibility with all transactions and structured process to minimize the “reset” time to re-engage and close with the new buyer by moving interested parties as far along in their diligence process while synchronized with other groups. After re-entering into exclusivity, the transaction was closed within three months.