• Sponsors thought Care Bears was under-commercialized relative to global appeal
• Value creation approach leaned on Warner Bros approach to IP management
• Early outperformance prompted sale to Authentic Brands after three-year hold

When IVEST Consumer Partners and Cloverlay acquired Cloudco Entertainment in 2023, Care Bears was just one property within the Los Angeles-based company’s portfolio of brands.

At an early board meeting, Jeff Collins, Cloverlay’s managing partner, cut through the swathes of entertainment-related intellectual properties (IP) and content initiatives to the key attraction.

“Jeff essentially drew a circle around Care Bears and said, ‘This is what matters,’” Aston Loch, a co-founding partner at IVEST, told Mergermarket.

The message was clear: the iconic children’s character franchise, which at that point had generated around USD 5bn in retail sales, was the asset. It made little sense to spend hours discussing other brands that represented just a small percentage of Cloudco’s revenue.

“I don’t want to hear about anything else at this board meeting,” Collins recalled telling management.

Over the next just under three years, IVEST and Cloverlay sought to build the brand around Care Bears, efforts that culminated in an agreement to sell Cloudco to New York-based Authentic Brands Group in June. The deal is set to close in 3Q26. Terms were not disclosed.

The original investment was IVEST’s first foray into IP ownership, but it made sense for the independent sponsor. George Jones, IVEST’s co-founder and chairman, previously led global licensing and consumer products at Warner Bros, and this has become the firm’s specialization.

Cloverlay, meanwhile, provided most of the capital and worked alongside IVEST on governance, board oversight and major strategic decisions. The Conshohocken, Pennsylvania-based firm focuses on “adjacent private markets” – making niche, esoteric, and uncorrelated investments across both tangible and intangible assets in various sectors.

Care Bears fell into the latter category: an opportunity to acquire an intangible asset below its intrinsic value, with IVEST on hand to provide operational expertise. “It was a perfect combination of complementary skill sets,” Collins said. “We shared a common vision regarding the milestones we wanted to achieve and what we were trying to build.”

White space 

The initial investment thesis stemmed from a belief that Care Bears was significantly under-commercialized relative to its global awareness. There was a significant gap between the royalty income being generated and what IVEST viewed as a logical baseline for an “evergreen” brand.

To get there, it turned to a modernized version of the licensing methodology – described by Loch as a combination of merchandising expertise and IP management – developed at Warner Bros. Mark Matheny, an operating partner and another of the entertainment giant’s alumni, stepped in as chairman of Cloudco to oversee the project.

“What they created was a playbook that essentially functions as a flywheel,” Loch said. “It’s about driving consumer interest through content, new media, collaborations, consumer touch points, and retail business development.”

The six-month process started with a global brand study and a gap analysis to understand the white space for the brand across geographies and categories. They then created opportunity “bubbles” representing potential royalty income by market and category, allowing management to focus on the largest revenue areas first.

“What we learned was remarkable,” Loch said. “For example, in France, Care Bears is so embedded in the culture that people sometimes assume it originated there.”

Identifying leading partner licensees in major international jurisdictions was a critical next step. At the same time, the team established direct links with retailers and wholesalers in the US, which remains the world’s largest licensing market. Progress was tracked closely.

“We could measure which geographies were working, which licensees were performing well, and whether contract renewals were being achieved at the levels we expected,” Collins said.

Discipline was also important. While it can be tempting to issue multiple licenses within the same product category or geography in exchange for upfront payments, over-licensing can erode long-term value by creating channel conflicts and weakening partner relationships, according to Loch.

They applied the same thinking to marketing. Rather than relying heavily on traditional advertising, Cloudco pursued select partnerships – with The Masked Singer TV series, which hosted a special Care Bears show, and with the Kardashians, long-time aficionados of the brand. Mascot appearances also featured in marketing initiatives.

“Today there are many ways to get in front of consumers without spending millions of dollars on traditional media campaigns,” Loch said. “That philosophy was central to our strategy.”

Path to exit

Between Cloverlay and IVEST assuming ownership and the agreed sale to Authentic, Care Bears’ revenue increased fourfold, according to the press release. Retail sales are expected to exceed USD 750m this year. The growth quickly exceeded the investors’ underwriting expectations, and by 2025, the business had reached an inflection point.

“We had experienced tremendous growth in 2024,” Loch said. “The question was whether that trajectory would continue. There was significant uncertainty in the world at the time, particularly around tariffs and other macroeconomic factors.”

Feedback from licensees suggested that momentum would continue. However, at a mid-2025 meeting intended to map out the next stage of the journey, IVEST and Cloverlay reasoned that the brand would be best positioned to flourish in a global licensing organization with broader infrastructure.

“As the business continued growing, it became clear that taking it to the next level would require additional capital and a new underwriting framework,” Collins said. “Ultimately, everyone around the table agreed this was the right time.”

The Raine Group, a specialist in IP-related deals, was hired to run an auction process. It helped that there was a recent reference point in Sony’s acquisition of a 41% stake in Peanuts for CAD 630m (USD 448m) from WildBrain. That business was valued at approximately 23x EBITDA.

Like Care Bears, Peanuts is viewed as a global, evergreen, family brand. Such assets rarely transact, with many others either family-owned or already snapped up by large studios or brand aggregators, Loch observed.

Accordingly, there was strong interest in Care Bears, though Collins noted that the number of “serious participants” was limited. “It quickly becomes clear who’s truly qualified and capable of owning an asset like this,” he said.

Care Bears will join a portfolio of more than 50 brands at Authentic – including Reebok, Sports Illustrated and Saks Fifth Avenue – that generate more than USD 36bn in annual systemwide retail sales worldwide.

For IVEST and Cloverlay, the outcome vindicated their decision to focus on the Care Bears brand. “It doesn’t matter how many billions a studio throws at marketing,” Loch said. “It’s a 45-year legacy, and you cannot buy shelf space in a child’s bedroom in 1982, 1992 or 2002.”