Casper had a whirlwind of a year in 2021.
First, it laid off key executives including its CMO, COO, and CTO. Then Phillip Krim stepped down as CEO as the company went private and was eventually acquired by Durational Capital Management.
The acquisition took the industry by surprise for a number of reasons. One of which is that many people do not know anything about Durational Capital Management.
Jeremy Raper, head of financial company Raper Capital, looked into them and found something fascinating.
First, he says Durational is “opaque, unknown” and has almost “no pedigree in deals of this nature.”
Durational Capital is not a name many people know—even in the financial world—and their website shows only three total investments since its founding in 2017, of which only one was completed—the acquisition of Bojangles in 2019, which was in partnership with The Jordan Company.
“More importantly, they don’t have the required capital to close,” Raper explains in a blog post, “and are thus relying on equity commitments from LPs who may well balk at taking on a highly distressed business at an irrationally high price. Secondly, the proxy statement makes clear that absent an immediate transaction, CSPR would be essentially bankrupt and in need of restructuring – indeed the other two ‘offers’ received for the business were hugely dilutive and/or basically out-of-court restructuring transactions. Such is the distress of CSPR today that even if the purported deal goes through, they are likely to need another large financing later in 2022. Thirdly, even if the deal does manage to go through in some form, since basically, all CSPR’s direct D2C comps have declined 40-50% since this deal was announced, Durational has both the negotiating leverage and a very reasonable argument, that the deal’s valuation needs to be recut, significantly.”
Raper also found that as of September 2021, Durational had zero active positions.
“Upon further digging and examination of the latest Durational ADV and brochures, it appears they are managing only ~$240mm in assets, and zero outside accounts (SMAs),” he says. “In fact, it appears the sum total of their assets may simply be an allocation from a single account.”
Though information about Durational is limited, it’s certain that they’re not your average capital management company, and that leaves many questions about the future of Casper.