Founded in 2012 by Richard and Alexa Sutcliffe, Passenger is a rapidly-growing outdoor clothing brand with a focus on sustainability. Passenger plants a tree for every order it receives and ensures that over 90% of its product portfolio is made with lower-impact materials such as hemp, organic cotton, and recycled cotton and polyester. The firm is set to achieve revenue of £50 million in 2023.
Consumer-specialist investment firm Growth Partner is taking a significant minority stake in Passenger as part of its domestic and international growth strategy. Former Gymshark chief executive Steve Hewitt, who is investing alongside Growth Partner, will become chairman of Passenger, while Growth Partner investment director James Worrall will join the board as non-executive director. Whanau Advisory, a firm founded by Steve Hewitt and including a number of former Gymshark executives, will become a strategic advisor to Passenger.
DWF advised Growth Partner with a team led by partner Will Munday and senior associate Francesca Kinsella.
Will Munday, DWF:
Can you tell us more about the role that your team played during this investment?
I have worked with James Worrall for many years, but this was our first instruction from Growth Partner. Our market-leading regional corporate team has deep-rooted venture capital and retail sector expertise, so the chance to assist Growth Partner with its investment in Passenger was a particularly exciting opportunity that played to our strengths.
We got involved at the heads of terms stage and assisted Growth Partner in preparing the key legal terms included in the initial offer letter. Once the heads of terms were agreed, we carried out a focused legal due diligence exercise on the specific areas of concern for Growth Partner. As would be expected, ESG was a key area of our due diligence review and our specialist regulatory team, led by partner Dominic Watkins, added real value here. Next, we prepared and negotiated the key transaction documents – sale and purchase agreement, shareholders’ agreement and new articles of association – as well as the various ancillary corporate documents.
Deal management was of particular importance on this transaction as there was a challenging timetable and the team had to negotiate with Passenger’s advisers and advisers for the co-investor, Whanau Advisory. Francesca, the senior associate on the deal, should be singled out for particular praise as she managed an extremely efficient process that involved negotiating with multiple parties at any one time.
What unique skills and experience did you bring to bear as part of your work on this transaction?
DWF’s corporate team has a particular specialism in private equity and venture capital investments. With a team of over 30 lawyers in the North, we are recognised for our skill in combining legal expertise within the PE market with a distinctively energetic, decisive and clear approach. This market knowledge was vital in the smooth running of the transaction and enabled us to deliver commercial and pragmatic advice to Growth Partner in order to achieve a successful and timely completion.
We use technology to make the administrative and burdensome elements of transactions simpler and more efficient. A good example is our bespoke platform ‘DWF Diligence’ that we have developed to help streamline and manage the due diligence process. On the Passenger transaction it was of great value in light of the challenging timetable as it ensured the legal due diligence was carefully scoped, planned and executed. It allowed multiple users, including lawyers from various other practice areas, to access and update the legal due diligence report at the same time. Further, we were able to use real time reporting to present up-to-date progress and key information to Growth Partner in visualisations which allowed us to resolve identified issues quickly.
We use technology to make the administrative and burdensome elements of transactions simpler and more efficient.
How did you work with your clients and other involved counsel to ensure a satisfactory outcome for all involved?
In our view, clients choose legal advisers based on ‘feel’ and ‘chemistry’. They want to know that their legal advisers will fight for their best interests, be a dedicated resource which is available when needed and engage with them in a straightforward and yet professional manner. This was our approach with Growth Partner and the team was able to develop a strong working relationship with James very quickly through regular communication at all levels.
As this was a significant investment for Growth Partner, albeit a minority stake, there was particular focus on negotiating the appropriate investor protections. This led to some suitably robust negotiations, but we were able to work together effectively with lawyers for Passenger (Osborne Clarke) and Whanau Advisory (Gateley Legal) to agree the key transaction documents and ensure Growth Partner’s interests as an investor were appropriately protected.