Case History

"Charterhouse's business model embraces entrepreneurs and entrepreneurial visions. I approached the firm with an idea, they worked with me to develop it into an actionable transaction and we were very successful at building a leading company within the consumer space. I have subsequently been involved in numerous Charterhouse consumer companies - an testament to the firm's strong ability to retain managers and build great relationships."

-- Paul Mullan

In late 1988, Charterhouse was introduced to Paul Mullan, an executive who had over twenty years of experience in consumer products marketing, sales and general management. Paul's background included various positions at Nestle, General Mills (Donruss - trading cards division) and Leaf (confections).

Paul had the idea of building a trading card and confectionary business and approached Charterhouse with a plan to purchase Fleer Corp, a leading manufacturer and marketer of sports picture cards for baseball and basketball. The plan was to evolve the Company into being the leading marketer of sports picture cards with a much broader distribution system and to obtain licenses to be in all sports categories, including football and hockey, in addition to being in entertainment cards. Paul and Charterhouse had identified the explosive growth potential in the sports picture cards market and they together reached out to the family that controlled Fleer. The business was acquired by Charterhouse in August 1989 for approximately $55 million.

Under Charterhouse's ownership, sales of sports picture cards increased substantially as a direct result of initiatives commenced by our Entrepreneur and the rising consumer interest in the collectible value of sports picture cards. Shortly after the acquisition, the management team significantly upgraded the quality of the standard sports card and introduced new categories of premium quality products including the "Ultra" card. As a result, the Company was able to implement and sustain price increases and achieve improved margins. The addition of additional licenses, including the commitment by the National Basketball Association, further boosted sales. To capitalize on the market opportunity, management instituted improved retail distribution and achieved national distribution, added manufacturing shifts and equipment, and increased the use of third-party manufacturers. The Company ultimately distributed its products in a variety of different sizes and packaging including through innovative card sets and dynamic inserts. Distribution channels expanded to include convenience and variety stores, mass merchandisers, supermarkets, hobby dealers and toy outlets. Sales increased from $51.6 million in 1988, the year prior to Charterhouse ownership, to $161.6 million in 1991 and operating income for the same period increased from $10.6 million to $39.2 million.

Charterhouse realized proceeds of $24.8 million when it sold approximately 25% of its shares in connection with Fleer's initial public offering in December 1990, and an additional $81.7 million when the firm sold the balance of its shares in a secondary offering in March 1992. As a result, Charterhouse's original equity investment provided a 19.0x multiple of invested capital during the three-year hold period.

In 1997, following Fleer's rapid growth and Charterhouse's earlier successful exit from the investment, Paul returned to the firm and assumed the CEO role of Del Monte Foods, another Charterhouse portfolio company. When Charterhouse successfully exited from this investment in 1999, Paul joined the firm full-time as a Strategic Partner.