Crains NY article:
June 08, 2021 06:50 AM
For one restaurateur, the pivot to PPE ends with a $70M acquisition
CARA EISENPRESS
Michael Sinensky, who ran restaurants in New York City including Village Pourhouse and Sushi by Bou, shut them because of Covid-19 pandemic restrictions last year, but he made a quick business pivot to source and market personal protective equipment.
That proved more profitable for Sinensky than hospitality: He now has sold the business, WeShield, for $70 million in cash and stock to Optec International, a California-based public company. Under terms of the deal, he remains chief executive of WeShield, now an independent subsidiary of Optec.
“It’s the largest business I’ve ever run in my life,” he said of WeShield, which is a little more than a year old and facing a world where masks and hand sanitizer are not as necessary in everyday life. The business had sales of around $60 million last year and projects more than $100 million this year.
Optec currently trades at about 8 cents per share, though it jumped to 36 cents after it announced a $2 billion PPE and medical device contract. For the fourth quarter, Optec said, its revenue exceeded $11 million, a 1,000% increase over the previous quarter.
Sinensky said talks about the acquisition began after Optec contacted WeShield about supplying products for its clients.
That introduction followed a busy year. Last spring, as many New York City restaurants turned to new takeout or packaged products, New York companies from various industries pivoted to making or selling PPE, both as a business and for charity.
The race to supply city agencies with PPE created opportunities for fraud and failures, as inexperienced companies received contracts they could not fulfill. Since last year, the state has spent more than $20 million in incentives to companies investing in manufacturing vital supplies.
Sinensky said he filled out his own unemployment claims alongside the 250 people his restaurant group let go. But even then, he had endeavors outside of hospitality. Through a charity he had founded after Superstorm Sandy, he began trying to procure quality masks and other protective equipment in a market that had gotten crowded with subpar supplies. Seeing the demand, he tried to figure out the supply chain and a customer base in health care and retail.
With three partners—one from the hospitality business and two others who had worked at an artificial-intelligence marketing firm—Sinensky put in savings to help secure a mask order for a nursing home chain, which he knew as an investor in his restaurants. They found a carpet company in New Jersey that could make the masks, and the deal went through.
“People know people, especially when you have a couple decades of hustling in New York,” he said.
Altogether, the outlay to start WeShield was $250,000, he said.
Sinensky also had been involved in founding a lending firm, which was able to make loans to WeShield against the orders that were coming in.
That was followed by a contract to provide employees and residents at New York City Housing Authority facilities with equipment at less than half the cost of what they had been paying. As the health crisis progressed, they followed the leads that came in, making gloves used for chemotherapy, medical gowns, sanitizer and rapid tests.
WeShield eventually learned to source through reputable manufacturers—a skill that became a central value of the company even as the health crisis has waned.
The company’s most valuable offering, Sinensky said, is its ability to find customers, especially outside the health care industry, who now need masks and sanitizer, using the company’s AI and marketing technology. Even after Gov. Andrew Cuomo announced that restaurants could drop most virus-related restrictions, Sinensky said he was sticking with the protective equipment business and was offering to send sample packs of masks, wipes and gloves to city resturants, in hopes that they would keep ordering the gear.
“I understand we are going to live a little differently in the future,” he said, but “cleaning products and disinfectant will still be here after Covid.”
