iParty Corp. is a provider of party goods, party planning advice and relevant information. Dedicated to selection, value and fun, iParty stores are designed to make shopping almost as much fun as the party itself. iParty was sourced to BMP by one of our close investor relationships in the private investment community. The company was an early participant in the online internet sales sector and was opening physical stores as well as adding to its online presence when we invested. The downturn of the internet made this investment quite challenging however we were able to recover value through tight management of expenses and by restructuring the expansion program. The timing of the investment made securing new capital at favorable values difficult therefore company management needed to work with the resources they had to build the business. We were able to structure a preferred equity position that ultimately allowed BMP to recoup our invested cost and realize a modest gain.
After building the dominant retail party supply franchise in the New England Region, BMP worked with Management and the Board on a merger with Party City (NYSE:PRTY) that would enable the company to leverage the resources of a larger enterprise to continue its expansion. The roll up strategy originally envisioned was compromised by the collapse of the internet bubble. BMP is pleased that the investment returned our capital after much work recovering from the effects of numerous market dynamics. The experience reinforces the need to appreciate the external factors which are beyond managements’ control and can determine a company’s success or failure.