It’s an exciting and dynamic time for middle-market food and beverage industry entrepreneurs. Gone is the day when Americans purchased the bulk of their food from a big name supermarket chain up the street.  (Only time will tell how the $9 billion private equity marriage of Safeway and Albertsons will play out.) Today, the market runs the gamut, from high-end chains such as Whole Foods to bargain chains like Aldi. At the same time, consumers are demanding options at all price points, and food and beverage entrepreneurs have obliged. The changing food marketplace isn’t limited to grocery chains either. Consumers also have more options regarding how their food, meals and groceries wind up on their doorsteps. They want fresh food fast, and more food delivery companies have surfaced to meet the demand. In recent years, grocery delivery has become increasingly available. And if you’re looking for a meal from your favorite restaurant, websites such as recent IPO candidate GrubHub can arrange delivery to your home or office.

Buyers Are Seeking to Acquire Food and Beverage Businesses

For CEOs of middle-market food businesses (companies averaging $25 million to $500 million in revenues), these changing times provide plenty of opportunities to grow and sell companies. At Allegiance Capital Corporation, our investment bankers specialize in a variety of industry niches – including helping entrepreneurs of food and beverage companies sell their companies or secure private equity capital. There is no shortage of buyers for growing, middle-market food businesses. Food giants, which house dozens or even hundreds of brands and/or private label categories under their umbrellas, grow profits through acquisition as the mature businesses they own often grow with the population. They seek out the super-charged growth of smaller companies to nurture and grow, and they have the capital to fund expansion and weather the margin compression and producer inflation that can sink smaller brands.

 Owners Have Numerous Sale and Investment Options

There are an endless number of scenarios involving the sale of middle-market businesses. You might be a CEO who is ready to retire and prefers to sell your business outright. Our investment bankers can help you prepare your business for sale and develop a compelling marketing plan that appeals to top buyers in both the strategic and private equity arenas. For the owner who wants to play forward, but take some chips off of the table now, the opportunities have never been as promising. Many private equity firms know that you are the one who built the business and there is no one better to lead it forward. They seek a partnership with you that combines your knowledge and leadership with their capital and strategic thinking to take the business to new levels. If you’re an owner who wants to continue to lead the company after private equity investors come on board, consider the following:

  • You can “take some chips off the table,” through an infusion of private equity capital. You will diversify your net worth, because it’s no longer all tied up in the business, and you still own a portion of the company and can play a role in leading it forward.
  • An influx of cash and resources from a well-heeled financial partner, who knows how to help you grow the business, can take the company to new heights.
  • You can look forward to fewer worries, because you are no longer personally responsible for debt guaranties or supporting downside scenarios.
  • You can take a “second bite of the apple” – cash from the sale of your company a second time – when you and the private equity firm sell the company five or so years down the road.

Plan Now, Sell on the Way Up, Enjoy the Fruits of Your Labor

If you’re a CEO of a middle-market food or beverage business, look to the future. You may not be ready to sell now, but a reputable investment banker can help you get your ducks in a row and educate you about your options. If you are ready to sell, now is a very good time. Strategic acquirers, private equity firms and their lending banks all have a strong appetite to participate and find the consistency of food and beverage industry cash flows that they find very attractive. To speak with a member of our experienced M&A team, call Allegiance Capital Corporation for a confidential consultation today. We’ll also be in attendance at the 2014 National Restaurant Association Show, May 17-20, in Chicago. If you would like to connect with us at the show – we’d be happy to schedule time to meet with you. Please call us at (214) 217-7750 to arrange a meeting at the event or offsite.

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Keywords: M&A; CEO; enterpreneurs; middle market business; family businesses; sell your business