Chatters Canada is the largest retailer of professional hair care products in Canada.

www.chatters.ca

Investment

C$55 million

Fund

ONCAP III

Period

July 2015 - Present

ONCAP Team

Mark MacTavish
Wole James

Transaction Summary

ONCAP acquired Chatters Canada (“Chatters”) from the company’s five founding partners. ONCAP acquired a majority interest in Chatters, and three founding partners maintained a minority ownership interest.

Business Description

Based in Red Deer, Alberta, Chatters is the largest retailer of professional hair care products in Canada and one of the largest hair salon operators in the country with 101 stores (41 franchises and 60 corporate stores) in seven provinces and sales split between retail (~60%) and salon services (~40%). The company offers a broad selection of over 5,500 SKUs of hair, tools, skin/body, nail and accessory products. For its services business, Chatters offers men’s and women’s haircuts, hair colour, hair styling and some esthetics services.

Investment Thesis

ONCAP was attracted to Chatters for several reasons, including: (i) a differentiated business model with superior store economics; (ii) strong brand recognition in many large markets throughout Canada; (iii) an attractive platform for salon professionals;
(iv) attractive real estate; (v) strong free-cash-flow characteristics; (vi) stable and growing industry with limited cyclicality (vii) a highly diversified business by customer, province, supplier, SKU and product category; and (viii) a strong, experienced management team. In partnership with the Chatters management team, ONCAP aims to create value through organic growth, new store openings and tuck-in acquisition opportunities within Chatters' various market segments.