People often associate distressed investment firms with a 1980s-style corporate raider. While the old “slash, burn, and sell for parts” techniques are still around, they are certainly much less prevalent and accepted than 30+ years ago.
Unfortunately, some of these firms now use the cover of “distressed private equity” to largely side-step criticism and continue to take over businesses that have fallen on hard times.
However, a successful rescue operation conducted by Sortis Holdings, Inc. (OTC Pink: SOHI) highlights how distressed
Rather than taking a hostile approach like Gordon Gecko taking over Bluestar Airlines, the Sortis team developed a plan to save Seattle’s iconic Rudy’s Barbershop in bankruptcy court and help the original founders to regain control.
Sortis Beats Out Two Distressed Equity Firms Trying to Scoop Rudy’s in Bankruptcy Court
Rudy’s Barbershop is an important part of Seattle’s charm and soul, as the business marks over 25 years of service in the community. The barbershop’s success led to an expansion to around 25 total shops across the United States, with 15 locations specifically within the Puget Sound region. A key driving force behind Rudy’s success is its original founders, Wade Weigel and David Petersen.
“When we founded Rudy’s Barbershop it was always about more than a haircut. It was a place for creative and social exploration. The spirit of Rudy’s culture, employees, customers, and community is all about having fun, celebrating who you are, and exploring who you could be. These are the parts of Rudy’s I am most excited to reconnect with,” noted Rudy’s co-founder Wade Weigel.
Unfortunately, Rudy’s fell victim to the Washington state and national lockdown efforts to curb the spread of the coronavirus. This forced the iconic business to seek bankruptcy protection in early April 2020, after shutting down operations in mid-March and laying off its 600 employees.
During bankruptcy proceedings, Northwood Ventures and Tacit Salon Holdings, were two potential suitors that were working to scoop up Rudy’s on the cheap. Tacit Salons has been taking advantage of the recent economy downturn by “snapping up salon chains battered by the pandemic at bargain-basement prices,” according to the Seattle Times.
In late April 2020, Tacit acquired Creative Hairdressers in bankruptcy court, which operates around 750 locations around the United States under the brands Hair Buttery, Bubbles Salons, and Salon Cielo.
Luckily, the company had a connection to Sortis through Butch Bannon, who worked with SOHI Executive Chairman, Paul Brenneke, to negotiate a strategy to successfully save Rudy’s. This also restored Rudy’s to its original founders.
SOHI Efforts Recognized By Seattle Times, Portland Business Journal, Others
Sortis was lauded for its efforts to save the cherished business by very notable publications, such as the Seattle Times and the Portland Business Journal. This not only serves as an important validation to Sortis’ efforts, but it also helps set the record straight that distressed
Beating out two notable firms also showed off Sortis’ negotiating and deal-making skills. Although Sortis and its management team have a long history of being able to negotiate successfully, this latest victory feels even more significant. The Rudy’s deal could also help lift Sortis in other negotiations down the road, as the firm shows it can continue to successfully strike deals and help create positive change as well.
Overall, Sortis Holdings continues its rise as a major alternative investment and real estate firm across the northwest United States. Utilizing a positive-approach that balances operational returns with a beneficial impact on the surrounding communities, Sortis will only continue to gain respect and thrive. In a time of great suffering as a result of the pandemic and unrest around the United States, we could use more firms like Sortis that are leading by example and challenging status quos.
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