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Premier Laser Spa acquired
In Premier Laser Spa’s recent emergence from Chapter 11, the formerly Perinton-based laser hair-removal chain’s 13 remaining locations have been acquired by a 15-store Michigan-based chain of spas specializing in laser hair removal, skin tightening and body sculpting.
As the Rochester Business Journal previously reported, filing in the name of its Turkey Lake LLC parent company in Bankruptcy Court in Albany last October, Premier Laser Spa asked for court protection five days before its co-owners and co-CEOs, Michael Linehan and Edward Naylon, were slated to celebrate the company’s No. 5 ranking on the Greater Rochester Chamber of Commerce’s 2015 Top 100 list of fastest growing private companies.
Founded in 2012 by Linehan and Naylon, Premier Laser Spa grew quickly and fell fast.
Ranked shortly before its 2015 bankruptcy as the nation’s third-largest chain of laser hair-removal salons, the company boasted 23 locations in 14 states.
By the time of its October 2015 bankruptcy filing, the salon chain had pared its store count to 15. To get to its most recent 13 locations, it merged some unprofitable salons into better-performing ones and closed others.
In the reorganization and sale, Linehan has remained as an executive and part-owner of the new chain, Farmington Hills, Mich.-based Body Contour Ventures LLC, which runs the Light Rx Face & Body salon chain.
Linehan remains based in the Rochester area and is now executive vice president of Body Contour Ventures’ business-development arm, BCA Acquisitions LLC. He is the chain’s sole local employee. Premier Laser Spa’s former Perinton headquarters, which had employed 20 of the 100 workers the chain employed last fall, has been shuttered.
Still branded as Premier Laser Spas, the 13 remaining locations are slated to be rebranded as Light Rx salons by July or August. The chain employs 150, 70 in Premier Laser Spa locations and 90 in Light Rx salons, according to Body Contour Ventures president Rich Morgan. It plans to add five stores soon.
Premier Laser Spa, which never had a Rochester location, at some point will have at least one local Light Rx salon, Linehan predicted.
The merged chain is now well-positioned for growth, Linehan said. One reason: Thanks to its new partner, it has added laser body sculpting and skin tightening, filling out too-lean product offerings with a new line of business.
“We’re really good at pulling in and keeping customers. It would help to have something else to sell them,” Linehan told the Rochester Business Journal in an interview last November.
A second reason Linehan sees for optimism: Morgan, who founded and ran the 220-salon American Laser Centers LLC hair-removal chain, is a seasoned veteran of the industry.
American Laser Centers twice filed its own Chapter 11s and ultimately liquidated, but none of that occurred on his watch, Morgan said.
“That all happened years after I was out of it,” he said.
In 2008, Morgan sold American Laser Centers to Code Hennessy & Simmons LLC and the Edgewater Funds, a two-firm consortium of Chicago-based private-equity firms. Terms were not disclosed.
As part of the deal, Morgan stepped away from the company, turning over its management to a CEO whose previous experience included stints heading a for-profit education company and executive positions for a parking concern and fast-food chains.
Four years later, American Laser Centers filed Chapter 11 and ended up being sold to another private-equity buyer, Versa Capital Management LLC, in a Bankruptcy Court sale.
In 2014, American Laser Centers again filed a Chapter 11 case that ended in a Chapter 7 liquidation.
Freed by the June 2014 expiration of a non-compete agreement he had inked when he sold the American Laser Centers chain in 2008, Morgan started the Light Rx chain in 2014.
According to a disclosure statement filed as part of Premier Laser Spas’ Chapter 11, Linehan retained a stake in the emerging Premier Laser Spa and was tapped for a management role in the merged chain as part of conditions imposed by Morgan.
Morgan paid $3 million to acquire the Premier Laser Spa chain, providing funds to finance a partial payoff of Premier Laser Spa’s creditors, the filing states.
“When I found out what was happening with Premier Laser Spa, it looked like a very attractive opportunity to me,” Morgan said in an interview this week. “It’s in an industry I’m comfortable with and they had good locations and good staff.”
Reasons Premier Laser Spas’ Chapter 11 disclosure statement cites for the chain’s downfall include: a field crowded with competitors including mom-and-pop salons, other multi-location chains and plastic surgery practices; a market particularly sensitive to economic downturns; and Linehan’s and Naylon’s decision to take marketing in-house to save money when cash became a problem.
The partners came to believe the business would have been better served by marketing campaigns run by local agencies familiar with their own markets, Premier Laser Spa attorney Maureen Bass, a bankruptcy lawyer in LeClairRyan P.C.’s Linden Oaks office, wrote in the disclosure statement.
The disclosure also cites the Chapter 7 liquidation of Morgan’s former American Laser Center chain as another stressor pressuring Premier Laser Spa. At its dissolution, American Laser Centers had 156 stores in 27 states.
The size of the chain’s Chapter 7 filing “shook both vendor and customer confidence in the industry (and) had a substantial impact on (Premier Laser Spas’) balance sheet as that bankruptcy flooded the market with discounted lasers,” Bass wrote.
Asked why he believes Light Rx will prosper, Morgan cited the chain’s ability to attractively price services, a boon he in part credited to its ability to acquire laser equipment at a good price. He also cited his long experience in the industry and in particular credited his own marketing expertise.
“Marketing is not one of the mom-and-pops’ or the physician offices’ skill sets,” Morgan said. “We know how to go into a market. That’s the secret sauce.”
5/27/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.
