Unique Balinese inspired designs have won John Hardy Limited a leading place in the North American designer jewellery market. When the founders decided to move on, 3i was the ideal partner to help grow the business and preserve its ethos.
A passion for South East Asian design
John Hardy made Bali his home in 1975, driven by a passion for the region’s distinctive jewellery. Recognising the global potential for South East Asian design, he and his wife, Cynthia, launched John Hardy Limited in 1989. The company’s hand-crafted pieces in silver, gold and semi-precious stones quickly achieved international success, particularly in the US, where they sell through prestigious retailers such as Neiman Marcus and Bloomingdales.
In 2003, entrepreneur Damien Dernoncourt joined the company, later becoming President. His initial priority was to help the business develop its systems and professional capabilities to match its outstanding sales and creative success. In 2006, John Hardy Limited earned annual revenue of almost $80m and won two Town & Country Design awards – the ‘Oscars’ of the designer jewellery industry.
Preserving the Hardy’s legacy
By 2007, the Hardys were keen to focus on environmental concerns and spend more time with their family. Finding a buyer with whom they felt comfortable and that would maintain the legacy they had built over 18 years was an important part of the sales process.
As Damien Dernoncourt recalls, “Although John and Cynthia considered selling the business to a multinational, their strong preference was for a management buyout. I had joined the company in 2003 because I shared the Hardys’ passion for South East Asian design, and they knew I would preserve their legacy and spirit.”
To complete the buyout, Damien began searching for a private equity partner. As he explains, “It was relatively straightforward to arrange debt finance but finding a partner to join me as an equity investor was a much more personal decision. Because it was so important to get it right, I interviewed 15 private equity companies.
“My reason for choosing 3i was simple – its people. They’re very human, they listen, and they have a clear approach that they execute with tact and passion. Ultimately, they wanted to understand the business and see how they could help. They weren’t just focused on their return on investment.”
A thorough and testing process
In October 2007, 3i invested $30m to acquire a significant minority holding. This followed a thorough due diligence process. For Damien, “The legal and financial due diligence involved a lot of work to demonstrate facts that essentially I already knew. It was the commercial due diligence that really added value.
“3i helped us analyse our competition, markets and strategy. They also asked very searching questions. By challenging the way we’d been working for years, they helped us streamline our products and eliminate non-core and low-value activities.”
For Damien, it was important that his new partner was approved by the Hardys, who will continue to be part of the business as consultants. “3i’s investors went to Bali to see John and Cynthia, and successfully convinced them that the company would continue to be a business its founders can be proud of.”
Delivering ambitious growth plans
The ambitious growth plans for John Hardy Limited will see it consolidate its strong US position and develop its presence in other key markets. For Damien, “To achieve our goals, we need great people and 3i is already proving invaluable as a source of talent. The non-executive director they appointed, Thaddeus Beczak, is exceptionally wellconnected and experienced, and has nowbecome Chairman.”
In Damien’s view, “3i are very active on the board but don’t interfere in day-to-day operations. At the same time, they help give the business a sense of discipline that is rare for a medium-sized company.”
As with all private equity investments, one day 3i will realise its holding. Is this a prospect that concerns Damien? “No. 3i were very upfront that they would need to exit in three to six years and we’ve talked at length about the potential routes.
“Of course it’s an area of some uncertainty but we’ve agreed to discuss the topic at each board meeting, so no-one gets any surprises. Ultimately I believe all of our interests are aligned, so a good deal for 3i will also be a good deal for the company.”
For more information about John Hardy, visit:
www.johnhardy.com