Posted in: Collectibles, Comics, Image, McFarlane Toys | Tagged: Gladstone Investments, MBA, McFarlane Toys, Ray Cornwell, spawn, todd mcfarlane
A Master Of Business Administration On The Todd McFarlane Toys Buyout
A Master of Business Administration on the McFarlane Toys Buyout by Gladstone Investment from Image Comics founder Todd McFarlane
Article Summary
- Todd McFarlane Toys buyout sees Gladstone Investment take a majority stake, with Todd McFarlane retaining equity.
- Higher tariffs and the looming loss of the DC license put major pressure on McFarlane Toys revenue and strategy.
- Gladstone’s deal includes $41.8M in first-lien debt and $14.3M in preferred equity, signaling a growth-focused play.
- Gladstone’s past Funko investment suggests the Todd McFarlane Toys buyout could position the brand for a stronger future.
Longtime Bleeding Cool reader Ray Cornell is currently a doctoral student in Business Administration at the Warrington College of Business at the University of Florida and earned his Master of Business Administration in 2025. He read my article on Gladstone Investment buying a majority share in Image Comics founder and Spawn publisher Todd McFarlane‘s McFarlane Toys and wanted to pitch in! Take it away, Ray!
“We get nervous when we hear a company has been sold to a private equity firm, especially when the company is part of our shared nerd experience. Many of us still know the Toys R Us jingle by heart despite the company being shuttered almost a decade ago. Maybe, after seeing a blockbuster superhero movie, you ate with friends at a TGI Fridays or a Friendly’s. My late friend and podcaster buddy, Glenn Walker, would regale people with stories of his love of cheddar bay biscuits from Red Lobster. All these companies ceased operating or drastically curtailed operations while owned by private equity.”
“And so, when word that a majority stake of McFarlane Toys (MT) was being sold to “venture capital” (more on that later), an understandable shudder went through fandom. McFarlane Toys was created in 1994 by Todd McFarlane when he was dissatisfied with designs for a Spawn toy line from Mattel. He reclaimed the rights for the toy line and decided to make them himself. The toy line was a hit, and the company grew from there. MT has worked on action figures for both DC and Marvel, along with licenses from the band KISS, all major American sports leagues, The Simpsons, Game of Thrones, and other TV shows and movies. MT is known for making high-quality, detailed figures aimed at satisfying the most discerning fans.”
“MT appears to have suffered rough times recently, although actual business figures aren’t publicly known since it’s a privately held company. Increased tariffs under the Trump administration have led to price hikes on its entire line. In 2025, it announced on social media that it had to increase prices on its DC Multiverse line to $24.99 due to 20% tariffs for products manufactured in China. Looking at its online store now, newer 7” DC Multiverse figures range from $24.99 to $34.99. (As an aside, one of my MBA professors remarked, “If you ask economists about their feelings on tariffs, 99% of them will say they’re bad for the US economy. The other 1% work for the White House.” Do with that what you will.)”
“In addition, MT will lose the DC license to Mattel at the end of the year. MT still has new releases of DC action figures coming out this year, and DC accounts for a large percentage of its sales (although how much is unknown). From a strategic perspective, it’s hard to see what MT does to make up the loss of DC. It already holds a license to make Marvel toys. It still holds numerous licenses for other movies and media properties. There are few visible opportunities to add a big license to make up for the loss of DC.”
“So, McFarlane has decided to sell a majority stake to Gladstone Investment. Gladstone is not considered a venture capital firm, but rather a Business Development Company designed to help small to mid-size firms get access to capital. MT will make up about 3.9% of Gladstone’s holdings and will be the 10th largest holding in its company, well behind other investments such as GGT Perimeter Defense (aka Global GRAB, supplying perimeter security products such as barriers to stop hostile vehicles), The E3 Company (maker of pressure-management systems for oil and gas wells), and Brunswick Bowling Products (makers of bowling center equipment).”
“MT isn’t the only toy company held by Gladstone. Gladstone holds about $77.9M in Schylling, a company best known for making squishy toys, lava lamps, and GenX skinned-knee producer Big Wheel. (I had a Green Machine, mind you.) Gladstone also holds $66.4M in Old World Christmas, known for “hand crafting the finest ornaments since 1979″. I for one can’t wait to see those Violator/Rudolph ornament sets.”
“Gladstone is loaning MT $41.8M and paying $14.3M for its preferred equity stake. The loan is secured first-lien debt. This means that, if MT defaults, Gladstone gets paid first through sale of specific assets (what those assets are, we don’t know). To be clear, there’s no reason to believe MT is currently in danger of bankruptcy; I’m just describing the funding terms. The extended credit isn’t free. Gladstone’s most recent 10-Q showed that three of its companies, Detroit Defense, Global GRAB, and Smart Chemical Solutions, were borrowing at a rate of SOFR + 9.0%. SOFR stands for the Secured Overnight Financing Rate; it’s the benchmark interest rate based on what banks and other institutions pay to borrow cash overnight when the loan is secured by US Treasury securities. Right now, that translated to a total interest rate of about 13%. While we don’t know the terms, it’s safe to assume that’s the rate MT is paying to borrow from Gladstone, meaning MT is paying about $5.4M in interest on the year for the loan. Gladstone’s credit facility costs them SOFR + 2.85%, so Gladstone makes a spread of 6% interest to extend the credit to MT. That adds up to about $2.5M per year in potential profit for Gladstone.”
“In fact, the MT acquisition was offset by a recent transaction that shows the golden path for MT. SFE Group was created in 2019 with the backing of Gladstone, merging three industrial tool companies (Mathey Dearman, B&B Pipe & Industrial Tools, and TAG) into one company. SFE Group created new brands and acquired other companies. Before announcing the MT acquisition, Gladstone announced the sale of the operating subsidiary of SFE Group to another company, Enerpac Tool Group. The proceeds of the sale pay off the debt of SFE Group, and then Gladstone will make money on its remaining equity interest after the holding company winds down over the next year. The payoff of the loan, about $55M, roughly offsets the outlay for MT. SFEG leaves Gladstone financially healthy and with a new partner that aligns with their business.”
“There’s one compelling reason for MT to have decided to sell to Gladstone: Funko. In 2013, Gladstone did a similar deal with Funko, extending $17.5M in debt and equity financing through two affiliated funds. This funding transferred Funko, LLC to a new group, Fundamental Capital, LLC. In 2015, another company, ACON Investments, LLC acquired Funko from Fundamental Capital. Gladstone sold its Funko stake for a significant profit. ACON Investments later backed Funko’s IPO in 2017. That deal wasn’t particularly successful, as Funko had the largest first-day drop in stock price of any IPO in the 21st century. Funko stock rebounded, and was as high as $31.05 in 2018. It now trades at just over $7 today.”
“That Funko experience is probably why MT wanted to partner with Gladstone. Business might be rough now, but business conditions change. If MT can weather the loss of the DC license, it’ll be partnered with someone who knows how to get back to better footing. Hopefully, this acquisition leads to happier days for all involved. I still have fond memories of my Violator action figure from 1994. MT is not “dead”, as I’ve seen on various social media platforms. Todd still has a meaningful equity piece, as does CEO Stephan Tetrault. This is just a new phase for the company. We’ll see what happens from here.”
Thanks, Ray. Keep an eye on this for me, will you?
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