• Aims to triple company’s market share
• Co-investing alongside “Shark Tank’s” Mark Cuban
• Sponsor has strong pipeline of deals

TSG Consumer’s recent investment in Dude Wipes was a deal two years in the making.

The San Francisco-based sponsor first came across the maker of disposable hygiene wipes in 2023, but felt it was too small for them to invest in just yet. After waiting patiently for the company to grow, it was a cold email sent by TSG Consumer to Dude Wipes in 4Q24 that sparked a conversation which ultimately led to the companies becoming partners in June, said Dan Costello, managing director at TSG Consumer.

“Our investments are often partnerships with founders – we like to spend time with them, get to know them and make sure there’s a really good cultural fit and mutual shared vision around the growth strategy, which is so important here,” Costello said.

Dude Wipes had not been actively looking for outside investment, but the prospect of partnering with a sponsor with the reputation of TSG Consumer was very appealing, said company co-founder and CFO Jeff Klimkowski.

After spending time together to evaluate whether a partnership would be a good fit, the “Dudes” realized it would be helpful to have an experienced partner like TSG Consumer to help navigate future challenges, Klimkowski said.

“Since we’ve started it, we purposely kept things simple – we used to always say, simplicity equals velocity,” said Klimkowski. “But now, as we scale, it’s time to bring in some complexity within the business to achieve that next level and drive growth. Dan and the TSG Consumer team have those resources and capabilities, whether it’s across supply chain, marketing, etc., that’s really going to help us.”

Value creation

Founded in 2011, Chicago-based Dude Wipes manufactures flushable personal wipes marketed towards men as an alternative to traditional baby wipes.

Following TSG Consumer’s investment, co-founder and CEO Sean Riley, co-founder and CMO Ryan Meegan, and Klimkowski will retain significant ownership stakes, while longtime “Shark Tank” investor Mark Cuban has also retained his investment, according to a press release.

Both Costello and Klimkowski declined to share how much TSG Consumer invested in Dude Wipes or TSG Consumer’s ownership stake in the company. Harris Williams served as lead financial advisor to Dude Wipes, while Lazard served as lead financial advisor to TSG Consumer.

Before completing its minority investment, TSG Consumer conducted surveys around the Dude Wipes brand and concluded that consumers loved the product’s marketing and authenticity, Costello said. The company resides in a category that barely had any innovation or marketing before the company came along, he added.

“It feels like we’re in the early innings of disrupting that,” Costello said. “But there’s also a ton of runway and white space to go as we think about continuing to take share and driving brand awareness, distribution growth, and thinking about new product development opportunities as well.”

Although the company recently launched a new LiL’ Dude Wipes product, a variation targeted towards toddlers, the core value creation initiatives will be centered around driving brand awareness and increasing product distribution, Costello said.

“We don’t feel like we need to go out and expand the brand into adjacent categories any time over the near term,” Costello said.

Klimkowski said that Dude Wipes aims to increase its market share in the bath tissue category from 2.5% to 8% over the next five years, while establishing Dude Wipes as a household name and continuing to disrupt the category. He declined to share Dude Wipes’ financials but noted that the company has been profitable since 2016.

Fund strategy

TSG Consumer focuses on growth opportunities in the consumer sector, with half of its portfolio being control deals and the other half being minority deals.

The sponsor invested in Dude Wipes through its ninth fund, TSG9, Costello said, which closed in November 2022 on USD 6bn. The TSG9 fund will invest primarily in high-growth consumer companies with revenues between approximately USD 100m and USD 1bn, according to a TSG Consumer press release.

“At the end of the day, we want to back businesses with exciting growth prospects,” Costello said. “It’s less of an EV [enterprise value] and size focus, more about partnering with brands that we think have a ton of growth runway and have real loyalty and connectivity with our consumers.”

TSG Consumer has carried out around half a dozen transactions so far this year, including two add-ons for its automotive repair business Joe Hudson’s Collision Center, the acquisition of Dallas-based gym chain EoS Fitness, and a minority investment in cookie and dessert chain Crumbl.

Costello said the sponsor also has a strong pipeline of deals for the rest of the year.

Looking ahead 

Unilever’s USD 1.5bn acquisition of men’s personal care brand Dr. Squatch was coincidentally announced on the same day as TSG Consumer’s investment in Dude Wipes, Costello noted, adding that it could be a good sign for personal care M&A in the second half of the year.

“For the back half of the year, at least, companies we know well are starting to think about opportunities to transact,” Costello said.

Costello and Klimkowski remain optimistic about the future of the consumer sector despite its struggles of late, noting that one of the keys to their partnership was an understanding that both would have to think long-term and not just what the business would look like six to nine months from now.

“It’s a tough time to battle test,” Klimkowski said. “But again, a battle-tested partnership – what’s that going to look like? Is it going to be somebody who’s not willing to partner with you? Or is it somebody that’s going to be hands-on, in the weeds with you, and working through it? So, you can look at it two ways.”