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Net-a-Porter took money from Richemont back in 2002 when raising money for their unprofitable eCommerce company was tough. They agreed, as part of the financing, to a Right of First Refusal clause which came back to haunt them 8yrs later when they ultimately came to sell. A great read for any entrepreneur considering taking money from a strategic.
Richemont’s right of first refusal — a perfectly legal clause which many strategic investors insist upon — also had a chilling effect on other buyers. According to an individual familiar with the sale process, letters of interest from General Atlantic Partners and Summit Partners, both for around £400 million, were also on the table around this time, but were never fully developed. They were not motivated to do the necessary due diligence work to submit a firm offer, when it could just be trumped by a matching offer from Richemont. The Net-a-Porter and Richemont relationship, who spoke on the condition of anonymity, describes the right of first refusal clause as “hugely problematic and probably a bit naïve on the part of the original shareholders to allow this to happen, and probably very unkind of Richemont to impose it
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