In mid-November each year, operators, investors, advisors, lenders, lawyers, and service providers meet in Las Vegas for the annual convergence of industry insight and expertise: the Restaurant Finance & Development Conference. G2’s Heidi Piché and Jenn Faulk attended and synthesized the key themes coming out of the three-day event.
Everyone is approaching 2024 with caution. Brands wary of consumer cost-consciousness are breaking from existing strategies to test traffic-driving discounts and value offerings. Operators fatigued by ongoing challenges are looking for an exit—likely leading to a spate of seller activity. Lenders are watching how consumers react to recent price increases, subsequent traffic declines, year-over-year profit margin trends, and the overall share-of-wallet relationship as they assess internal credit appetites.
What does all this mean for restaurant operators looking for a life raft—namely, capital or a change-of-control transaction in 2024? We’ve broken down the four most important insights.
Bigger is Better
Why scale matters more than ever.
It is simply more expensive to do business today. The cost of inventory, labor, real estate, and capital improvements have all risen. What’s more, the borrowing index has surged by 200 bps compared to 2022, coupled with elevated risk premiums being charged by lenders. For many, the price to secure the capital is at a premium, but for those who can scale, mainly through acquisition, opportunities await, including:
- Bolstered buying power and cost synergies on overhead
- Easier access to capital due to size and scale
- Premium platform valuations gained through multiple arbitrage
Hold, Please
When waiting to raise capital is wise.
While gaining market mass is one winning strategy, holding tight is another. That’s because there are fewer active lenders today—most with more restrictive credit risk appetites and many prioritizing existing relationships. What’s more, many lenders are reducing leverage at underwriting and covenant setting by at least half a turn. The depth of the syndication market also poses challenges, requiring larger commitments from the top-tier banks. This exclusive credit club leaves a lot of restaurant operators out; therefore, if you have the runway, sit tight with your existing agreements.
If you are still considering borrowing, be aware that most banks require ancillary business, meaning business owners are tying up funds that in prior years could have been used for growth—and are increasingly coming forward with personal deposits to meet requirements. If you are exploring private credit to fill the gap left by the tighter senior credit market, be prepared to pay a premium on top of what senior lenders offer.
Don’t Despair
Which deals are getting done.
The dynamics may seem complex, but the reality is that strategic and private equity groups have capital to deploy and are still actively looking to acquire businesses. Another benefit: Given deal scarcity, strong assets still command competitive processes and high multiples.
Here’s what we expect to see in terms of deal flow and close rates in 2024:
- Conference participants expressed optimism about the prospects for increased M&A activity in 2024, particularly for well-capitalized, credit-worthy companies looking to scale, acquire alternate revenue channels, or underwrite cost synergies.
- Despite a disconnect between buyers and sellers over the last two years, operating trends have stabilized, leading to a compression in the bid/ ask spread between buyer and seller.
- Fatigue is expected to prompt more owners to ask, “Is now the right time to sell?”
- Due diligence will take center stage, resulting in more extensive analyses performed over a longer period and posing higher investment committee hurdles.
More deals and diligence mean a potentially lower close rate but an overall healthier M&A year, resulting in the survival of the fittest.
Get Prepared
How to make a successful exit.
Given today’s market, you must prepare well ahead of an exit. Consider the past and present: Do you have a strong historical track record and the right team to support your business going forward? Are you confident that your operations are strong today and sustainable in the face of future market shifts?
At G2, we are available as a proactive resource to help assess your financial and operational health as well as strategic alternatives. Our sector strength gives us a point of view on where the restaurant industry and lending community are headed—and how not to get left behind.
To learn more about how our industry insight can support your business goals, contact our Consumer & Retail team.
| Heidi Piché Managing Director, Consumer & Retail [email protected] 617.823.9398 | Jenn Faulk Vice President, Consumer & Retail [email protected] 508.654.2346 | Matt Konkle President [email protected] 317.371.6608 |
G2 Capital Advisors, a leading full-service investment bank and restructuring advisory firm, announced the continued expansion of its investment banking team today with the addition of Heidi Piché, a managing director in the firm’s consumer and retail group. As Managing Director, Heidi will spearhead the firm’s efforts in the Consumer & Retail industry, leveraging her extensive expertise and industry knowledge to deliver exceptional advisory services to G2 clients within the Consumer & Retail vertical, specifically the restaurant and franchised business sectors.
“We are thrilled to welcome Heidi as a senior member of G2’s consumer and retail team,” said President of G2, Matt Konkle. “Her deep experience and relationships across the consumer and retail space both complement our existing capabilities and reinforce our ability to deliver best-in-class client outcomes.”
Piché brings over 20 years of banking experience, primarily in helping middle-market restaurant companies raise capital for growth and/or M&A activity. Prior to joining G2, Heidi spent 15+ years at Wells Fargo, most recently as a Segment Leader within the Restaurant Finance Group. During her tenure, she was pivotal in establishing Wells Fargo as an industry leader in Restaurant Finance, executing high-profile transactions, fostering valuable client relationships, and developing innovative financial strategies.
Before leading a division of the Restaurant Finance Group, Piché was an officer in the Credit Resolution Group, providing risk management and industry expertise to clients most impacted by the COVID-19 pandemic. She began her tenure at Wells Fargo as a Business Development Officer, managing and developing client relationships, working closely with both founder-owned businesses and private equity sponsors active in the C&R industry. Before joining Wells Fargo, she worked at Bank of America in the Corporate Banking Restaurant Group.
“Heidi’s appointment represents a significant milestone for our firm as we continue to strengthen our position in the consumer and retail sectors,” said Jeffrey Unger, Chairman & CEO of G2 Capital Advisors. “Her expertise and dedication to delivering exceptional client service align perfectly with our mission of providing best-in-class investment banking services. We are delighted to welcome Heidi to our team and look forward to the success she will have on the G2 platform.”
G2 Capital Advisors offers M&A advisory services, including sell-side and buy-side advisory capital markets, operational and financial restructuring, and related strategic advisory services to complement a client’s growth plan. With a distinguished track record of advising on nearly $4 billion in closed M&A transactions, providing integrated investment banking services for high-growth companies in the Consumer & Retail, Industrials & Manufacturing, Technology & Business Services, and Transportation & Logistics industries.
G2 Capital Advisors is pleased to present its Consumer & Retail industry update for Q3 2022, providing commentary and analysis on M&A and market trends within the Consumer & Retail sectors.
The world’s largest fast-moving consumer goods companies saw robust growth following the global pandemic, and exhibited resilience in the wake of supply chain constraints and the sharp rise in inflation. In fact, the sector not only survived – it thrived, with average sales exceeding pre-pandemic levels. That said, as sentiment has coalesced around a near-certain downturn, performance is not surprisingly bifurcating between staples and discretionary goods, with prospects for the latter turning sharply.
High inflation, supply chain issues, and increasing recession worries are all factors pressuring the consumer discretionary sector, which already faces the greatest sensitivity to economic cycles. In Q3 2022, discretionary goods companies saw increases in two risk criteria – lowered corporate guidance and greater short interest. Companies in the sector that lowered guidance doubled vs Q2 and increased ten-fold vs Q1, with short interest surpassing all other industries.
Consumer staples, on the other hand, held up better than the broader market, consistent with prior downturns. While the S&P tumbled 25% through Q3, consumer staples stocks fell less than half that, playing their traditionally defensive role. Nonetheless, consumers are now choosing what and where to buy differently, as the pandemic shifted a growing portion of food sales online. Moreover, while many brands enjoy pricing power over private label products, they are nonetheless vulnerable to premium house brands from the likes of Whole Foods and Trader Joe’s.
After years of grappling with the rise of online shopping, brick-and-mortar retailers are posting some of their best results, with retail vacancies at a 15-year low and plans for expansion underway as consumers continue to venture out post-pandemic. In fact, sale growth among physical stores is outpacing that of e-commerce, as the pandemic forced companies to expand and better integrate their omni-channel offerings. While still vulnerable, the retail industry nonetheless appears better-positioned than in prior downturns.
Rising Inflation Causing Consumer Pause
With the changing inflation rates, the U.S. still holds an optimistic outlook on global e-commerce, though some consumers may be more hesitant to engage in interactions. Ensuring proper customer experience and well-handled delivery procedures could go a long way in retaining shoppers in 2023.
Mastering the Retailer Supply Chain
Players like Amazon and Walmart have set a new standard for consumer’s expectation for same-day or next-day delivery. To respond, we’ve seen retailers enhancing their partnerships with, and even acquiring third-party logistics providers to get goods to consumers faster. Recent examples include American Eagle Outfitters’ acquisition of Quiet Logistics, Costco’s acquisition of Innovel Solutions, and Panasonic’s acquisition of Blue Yonder, a widely used warehouse and labor management platform.
It’s no secret COVID-19 exploited vulnerability to global supply chain and manufacturing procedures. As many retailers felt the repercussions of this and know the outcome of another supply chain disruption, companies may start to diversify the location of suppliers to account for the unpredictability of this disruption.
Our consumer & retail team has played a hand in acquisitions for retailers with recent engagements including:
- Acting as Exclusive Financial Advisor for TPS Holdings LLC in acquiring The Paper Store
- Acting as Exclusive Sell-Side Advisor in Champlain Capital acquiring Bee’s Wrap
Shift to e-commerce beyond just distribution
Brands that were traditionally offline continue to seek additions to bring them online as quickly as possible, and many of these partners are opportunistically acquiring brands themselves. The incredible growth in the eCommerce Aggregator space, driven both by traditional M&A activity and high-value VC investment, continues to dominate the headlines. Additionally, consumer companies continue to invest in areas like CRM and content marketing to extend the product experience and further influence consumers’ decision-making and online presence.
Consolidation focused on higher-order territories
Where M&A activity historically skewed toward product category or aisle consolidation has shifted into higher-order need-state territories and solutions. For example, owning the hand cream aisle has taken a back seat to owning a total care story, and owning healthy eating has been replaced by owning all of the lifestyle. Further consolidation is expected as many product categories and store aisles remain highly fragmented.
How to win in retail today? Be nimble and think broader
For consumer & retail companies, the ground is constantly shifting. Spiking and fickle consumer demand, supply chain snarls, inflation, and fast-evolving consumer preferences are reverberating throughout the industry. These shifts are affecting every aspect of a retailer’s business—from sales and marketing strategy to inventory and supply chain management.
What Are Consumers Looking For?
Consumers expect more from retail companies today. They demand an easy, efficient, and enjoyable experience above all else. They increasingly expect retailers to meet them exactly where they are, and to meet their expectations instantly, all while displaying a lower capacity for frustration.
“Retail is as real-time as it’s ever been. Pricing fluctuations, trip-driving behavior shifts, and demand for immediacy—especially given the normalization of same-day delivery and an endless aisle online—have forced everyone in retail to leave room in their long-term plans for adaptations and adjustments.”
– Brian Cohen, Managing Director & Head of Consumer & Retail, G2 Capital Advisors
Rather than temporary, pandemic-related changes that will revert back to normal, we believe these shifts have permanently altered the retail environment.
Against this backdrop, it is critical for consumer & retail companies to embrace a more nimble and flexible strategy. Today, long-term plans are only as good as how often you revisit them. Management teams must continuously reassess their strategy and make adjustments based on the prevailing market conditions.
Questions Retailers Should Be Thinking About
- Will inflation continue to slow, and how much further could interest rates rise?
- The Fed continues to raise rates at a slightly slower pace and has signaled its intention to continue doing so at least through the spring.
- Will a slightly slowing economy morph into a full-blown recession, and will the labor market remain strong?
- While sales and margins show signs of softening, the labor market continues to defy expectations, making it hard for the Federal Reserve to further ease the policy. Layoffs in the technology, media and real estate industries make headlines. Still, they represent a minuscule portion of the labor force, with overall jobless claims falling by 20,000.
- How much longer will pandemic-era savings and easing supply chains buttress consumer spending, and will they continue to spend more on necessities?
- While personal savings soared to nearly $6.5 trillion in 2020, they’ve since dropped to below $500 billion, lower than the $1.4 trillion pre-pandemic. Despite supply chain imbalances driving discount sales as retailers looked to shed excess inventory, consumers are focusing their budgets on food and other staples and spending less on holiday categories such as electronics, clothing, and sporting goods.
- Ultimately, is a recession inevitable, and how bad might it get?
- This remains anyone’s prediction, but for business owners, management teams, and industry leaders, any level of uncertainty should be met head-on – waiting to seek clarity can be a losing move.
How do these trends affect you?
Our consumer & retail team welcomes the opportunity to share our perspectives on today’s consumer and retail environment. We can help you revisit your strategic roadmap, including whether now is the right time to sell your business, continue to grow through acquisitions, or raise external capital. Contact us to start a conversation today or learn more about our expertise in retail.
G2 Capital Advisors (“G2”) announced today the formal launch of its fourth industry practice, Consumer Retail, synchronously with the appointment of Brian Cohen as Managing Director, Head of Consumer Retail. While this announcement officially acknowledges the newly-formed practice, the decision to invest in the firms’ growth across this industry is rooted in its’ deep history serving clients within the Consumer Retail space over the last ten years. Of note, G2 has completed 30+ engagements to date supporting Consumer and Retail clients such as The Paper Store, Chia Pet, Bee’s Wrap, Directed, Sound United, Arbre Farms, Slade Gorton, Yandy.com, etc.
Cohen has over 25 years of client-facing experience and a deep knowledge of the consumer and retail space; he is a seasoned and recognized business and marketing executive, visionary, and change agent. Brian brings a dedicated expertise in enterprise-level operations and leadership, M&A, marketing, digital transformation, and eCommerce with a proven track record as a hands-on entrepreneur, business builder, operator, growth driver, and team leader. With a focus on executing strategic M&A transactions, planning & execution, and capital raises for emerging brands, Brian will collaborate with G2’s senior leadership to expand the firms’ existing footprint in the space.
“Adding a leader and professional of Brian’s quality and accomplishments is a key milestone for our Firm. His background is uniquely suited for this role given his diverse blend of consumer and retail experience, and a career track record of driving strategic growth initiatives for both the clients he’s served and companies he’s led, including M&A, advisory and restructuring initiatives. We are looking forward to harnessing his drive, ingenuity, and collaboration as we grow and expand our sector expertise across the consumer and retail universe,” said Matt Konkle, President of G2 Capital Advisors.
Leveraging the full breadth of G2’s capabilities across buy-side advisory, sell-side advisory, capital markets, and restructuring, the Consumer Retail team will utilize its expertise to help clients fuel long-term strategic growth. This announcement builds on G2’s tremendous momentum over the past year. Brian’s addition to G2’s highly qualified and experienced team will naturally extend the Firm’s reputation in the Consumer space, leveraging the strength of the G2 brand with more activity and resources in the associated verticals.
“I’m thrilled to join G2 at such an important moment in the company’s history.” Said Cohen. “As a former client, I’ve witnessed first-hand the value, expertise, and partnership that this organization provides, and I am energized to extend that same partnership forward through the launch of the Consumer Retail practice.”
“We live in a fast-moving and ever-changing world. Shifting consumer motivations and behaviors are driving a whole new set of opportunities and challenges for retailers, service providers, and manufacturers alike.” Cohen continued, “As a result, organizations are facing new opportunities to achieve meaningful growth and maximize value. As a former CEO faced with this very dynamic, G2 helped me navigate these challenges and identify the best path forward for operation. It is for these reasons that now is the perfect time to join G2 and formally launch the Consumer Retail practice to help guide and support others in the same capacity.”
Before G2 Capital Advisors, Brian was the CEO of Match Marketing Group, a private equity-owned North American consumer and retail-focused marketing services organization with 500+ employees across the US and Canada. Brian led the financial turnaround to profitability and stability while simultaneously modernizing Match’s data-driven go-to-market approach, new business philosophies, and marketplace position. He facilitated the sale of Match during the Covid-19 pandemic for a favorable return for all.
Brian will be based out of G2’s Boston office and report directly to Matt Konkle, President of G2 Capital Advisors.
MEDIA RELATIONS:
Jennifer Johnson, Vice President, Marketing T: 978.204.8050 E: [email protected]
G2 Capital Advisors announced today that Matt Konkle has been appointed President of the firm. Formerly Senior Managing Director and Head of Industry Teams at G2, Matt is an accomplished C-Level executive and operator with 25 years of experience in the Technology and E-commerce services industry. Matt possesses a deep background leading complex advisory transactions in the middle market. In his role as President, Matt will lead the day-to-day aspects of G2 as well as provide oversight to the firm’s business sectors in developing and executing against its short and long-term strategies.
“With the explosive and sustained growth of the firm, it is the right moment for us to continue to invest in our organizational leadership. Matt has the vision, leadership, and expertise to support the changing and growing needs of our organization as G2 continues to scale and drive towards our long-term strategic objectives,” says Founder & Chief Executive Officer Jeffrey Unger. “Matt’s unique understanding of our clients from entrepreneurs to institutional investors and their respective requirements makes him the ideal leader to complement our management team. We are making this organizational change to support the next stage of our growth, amidst significant firm-wide momentum as we charge through the second half of this year. Matt will be working very closely with our entire leadership team to leverage its collective experience, market and industry knowledge and operational expertise to position G2 to achieve, if not exceed, the objectives set for growth.”
“I am honored and excited to take on the role as President of the G2 team. It’s a privilege to be a part of a tremendously strong company poised for continued growth. We have an extremely talented, diverse and accomplished team who are deeply committed to achieving success for our clients. Now is the time to focus on how G2 can evolve holistically to support overall firm growth.” says Konkle. “This is a pivotal moment for G2 to build on the impressive momentum we have accomplished, the collaborative relationships we have with our clients, and the organizational culture and go-to-market strategy established by our CEO and founder, Jeffrey Unger. I have worked beside Jeffrey for the last six years and personally understand the significance of his contributions. His dedicated leadership and passion provide an example for us all, and I look forward to partnering together as we leverage the knowledge and expertise across the organization to unlock G2’s growth potential.”
Before joining G2, Matt was President of Fifth Gear, a tech-enabled services company and provider of end-to-end e-commerce solutions, including order management, fulfillment, customer care, and freight management. Matt led Fifth Gear from inception, including developing the company’s product and service offerings and go-to-market strategy. Matt partnered with G2 on buy-side, financial advisory, and sell-side mandates as part of Fifth Gear’s growth strategy. In 2014, Matt and G2 completed a strategic sale of the business to Speed Commerce (NASDAQ: SPDC). As the Chief Operating Officer of Speed Commerce, Matt was responsible for a team of over 1,500 employees serving over 30 retail and consumer brands. In his previous role at G2 as Head of Industry Teams, Matt was focused on maximizing the value of firm’s industry-specific, operations-centric approach in the middle market. Through that work, Matt has developed a deep understanding of the support required for a high-growth organization like G2. He has had a direct impact on the firm’s agile approach to accommodating the evolving needs of its clients.
Matt holds a Bachelor of Science in Business Administration from the Indiana University Kelley School of Business and a Master’s in Business Administration from the University of Chicago Booth School of Business.
CLIENT
Worldwide Produce (“Worldwide”) is a leading distributor of high-quality fresh fruits, vegetables, dairy products, and specialty foods to local restaurants, national chains, hotels, country clubs, entertainment venues, and catering companies in the Southern California region. Operating from state-of-the-art climate-controlled facilities in Los Angeles, California and Las Vegas, Nevada, Worldwide stocks thousands of items needed to efficiently operate a foodservice business. Worldwide also carries hard-to-find specialty items, paper goods, and cleaning supplies.
SITUATION
Long-term industry leader, Worldwide, joined forces with financial partner, Sole Source Capital (“Sole Source”) in 2019. Since being founded in 1989, Worldwide established its reputation as a premium produce provider to the Foodservice industry and experienced strong organic growth. Following its partnership with Sole Source, Worldwide’s management team were looking to further enhance their growth through a targeted M&A strategy to deepen their service and product offerings, acquire new customers, and expand geographically into new markets.
ENGAGEMENT
G2 Capital Advisors, LLC (“G2”) served as the exclusive financial advisor to Worldwide leading a bespoke buy-side effort focused on identifying and engaging with companies that have a strong market presence and operations within the produce distribution markets.
OUTCOME
G2’s mandate with Worldwide led to the acquisition of Vision Produce Company (“Vision”) which added an enhanced geographic presence, additional sales channels, deep grower relationships, and a strong talent pool. Together, Worldwide and Vision will leverage a larger geographic footprint, impressive food safety records, and expertise to deliver the highest quality of goods to their customer base.
Todd Ferguson, CEO of Worldwide Produce, commented “I’m thrilled that Vision Produce has joined the Worldwide family. The team at Vision brings tremendous experience sourcing and importing quality produce, and expertly serving their blue-chip customer base. With a location in Phoenix as well as Los Angeles, Vision’s footprint allows us to continue to expand our reach and serve customers in this key growth market.”
“We are excited for the Worldwide team on its closing of Vision Produce as this acquisition will further enhance their capabilities. Both companies are highly reputable players with long histories of success, and we are glad to have played a role in their new partnership,” said Andrew Keleher, Vice President at G2 Capital Advisors.
About Worldwide Produce:
Worldwide Produce is a leading distributor of fresh fruits, vegetables, dairy products, and specialty foods to independent and chain restaurants across the Southern California region. The company operates out of two distribution facilities located in Los Angeles, CA and Las Vegas, NV and stocks roughly 6,000 SKUs. Worldwide Produce was founded by current management in 1989 and has rapidly grown its revenue base due to its high-quality produce, superior service levels, strong sales staff, and high-quality
leadership.
About Vision Produce Company:
Established in 1980 with facilities in both Los Angeles and Phoenix, Vision Produce is a produce importer and distributor selling primarily to retail, wholesale and foodservice distribution customers in the Western United States. The Company offers a variety of fresh produce types including mangoes, limes, melons, chili peppers and more, which are sourced primarily from Mexico and South America. Additionally, Vision Produce owns Southwest Truck Brokers, a Phoenix-based freight and logistics broker primarily servicing the Western United States.
About Sole Source Capital
Founded in 2016 by David Fredston, Sole Source Capital is a private equity firm that thematically invests in fragmented, high-growth industrial subsectors. Sole Source seeks founder-owned businesses or corporate carve-outs that will benefit from the team’s operating and M&A capabilities. The Firm has a strong operating heritage that enables it to execute a buy and build strategy with significant downside protection. The Firm is headquartered in Dallas, Texas with offices in Santa Monica, California. For more information, please visit www.solesourcecapital.com or contact [email protected].
About G2 Capital Advisors
G2 Capital Advisors provides M&A, capital markets and restructuring advisory services to the middle market. We offer integrated, multi-product and sector-focused services by pairing highly experienced C-level executives with specialist investment bankers. We aspire to be the trusted advisor of choice to our clients including corporations and institutional investors.
CONTACTS ON THIS DEAL:
Peter Reed, Director, Buy-side: T: 617.918.7972 E: [email protected]
Andrew Keleher, Vice President: T: 860.748.6480 E: [email protected]
Matt Ball, Senior Associate: T: 617.918.7933: [email protected]
Aaron Levy, Senior Analyst: T: 857.250.2767 E: [email protected]
CLIENT:
Arbre Group Holding Corporation (“AGH”) is a family-owned business that began in 2009 following the acquisition of the assets of Arbre Farms Corporation (“AFC”) and Willow Cold Storage Corporation (“WCS”, together with AFC, “the Company”). AGH has roots dating back to 1948 when Francis Marks founded a fresh produce company. Through its wholly owned subsidiaries, including Paris Foods Corporation, Holli-Pac Inc. and Sun Mark Foods, AGH offers processing, re-packaging, distribution, and storage for a variety of frozen fruit and vegetable products.
SITUATION:
AGH was formed through a combination of frozen fruit and vegetable processing, re-packaging, cold storage, and distribution businesses across Central and Eastern U.S. G2 Capital Advisors, LLC (“G2”) was initially engaged by the Board of Directors of AGH to evaluate strategic alternatives for the Company in service of helping them realize their long-term vision, including a current state analysis of the business, assessment of potential growth opportunities and development of financial and operational alternatives. Following thoughtful consideration of the strategic alternatives, the Board of Directors engaged G2 to pursue partnership opportunities for its processing assets, allowing AGH to allocate resources to its core distribution businesses.
ENGAGEMENT:
G2 served as the exclusive financial advisor to AGH, leading an expedited, hands on process to evaluate partnership opportunities for AFC and WCS. G2 focused on identifying potential partners for the Company with deep operational expertise in food processing and who understand the value of the facility and assembled assets.
“The AGH team trusted G2 to run the process to support its long-term vision for its companies. It was a pleasure working with the AGH team to deliver the optimal outcome for AFC and WCS. We are excited about the future and look forward to watching the continued success of the Company with a highly capable partner in OPC.” said Don Van der Wiel, Managing Director for G2.
OUTCOME:
After evaluating various partnership options, AGH determined a carve out sale of the Company ultimately presented the best path forward for AFC and WCS. The transaction was successfully closed on April 30th, 2021 through a sale of AFC and WCS to Oregon Potato Company (“OPC”), and assigned to OPC Arbre Farms, LLC. The acquisition strengthens OPC’s position as a leader in the vegetable processing and distribution space to better serve its customers across North America.
“This outcome provides AFC and WCS with an opportunity to leverage OPC’s footprint, expertise, and relationships to accelerate growth and extend its reach in the frozen vegetable market. We thank G2 Capital Advisors for guiding us through this complex and detailed process. G2 acted as an extension of our team providing valued support and trusted advice throughout.” said Dylan Marks, President & CEO of AGH.
About Arbre Group Holdings:
Founded in 2009 with history dating back to the late 1940’s, AGH through its subsidiaries specializes in globally sourced frozen fruit and vegetable wholesale distribution, frozen produce importing, frozen vegetable processing, frozen produce re-packing, and cold storage services to the retail grocery, foodservice, and frozen food manufacturing companies throughout North America.
About G2 Capital Advisors:
G2 Capital Advisors provides M&A, capital markets and restructuring advisory services to the middle market. We offer integrated, multi-product and sector-focused services by pairing highly experienced C-level executives with specialist investment bankers. We aspire to be the trusted advisor of choice to our clients including corporations and institutional investors.
CONTACTS ON THIS DEAL:
Ben Wright, COO: E: [email protected]
Don Van der Wiel, Managing Director: E: [email protected]
Zach Talotta, Senior Associate: E: [email protected]
Kevin Lamb, Senior Analyst: E: [email protected]
Andrew Keleher, Vice President: E: [email protected]
CLIENT:
Match Marketing Group (“Match” or the “Company”) provides a suite of marketing services focused on driving consumer engagement, brand recognition and sales conversion. The Company is comprised of two business segments Public Label, a creative agency focused on helping brands align with consumer motivations and cultural movements and Match Retail, an agency focused on helping brands become retail ready. Specific service offerings across the two business segments include creative, strategy insights and data analytics, social and digital media, shopper marketing, experiential marketing, merchandising and retail solutions. Match’s client roster includes numerous Fortune 500 Companies, spanning consumer packaged goods, automotive, insurance, service businesses, technology, electronics and retailers. Public Label label is headquartered in Boulder, Colorado and Match Retail is located in Toronto, ON.
SITUATION:
Match Marketing Group was developed through a roll up of a collection of marketing agencies prior to Southfield’s acquisition in 2018. When the COVID pandemic hit in early 2020, the marketing and creative agency industry was among many industries negatively impacted. Global stay at home mandates reduced the demand for marketing support to brick and mortar retailers, and mass gatherings and large audience based events were put on hold. Further, the Board of Directors had hired new leadership in Q3’19 to facilitate a strategic re-imagination and modernization of Match’s core offerings through the investment in, and acquisition of, new tools, companies and capabilities.
ENGAGEMENT:
G2 Capital Advisors, LLC (“G2”) was initially engaged by by the Board of Directors of Match to evaluate strategic alternatives for the Company in service of helping them realize their long term vision, including a current state analysis of the business, assessment of potential growth opportunities and development of capital alternatives. Following thoughtful consideration of the strategic alternatives by all stakeholders, Match’s Board of Directors engaged G2 to pursue a recapitalization of the business with a new source of debt and equity capital under a focusedmarket process.
OUTCOME:
The transaction was successfully executed on December 23, 2020 through a sale of Public Label and Match Retail to Innovatus Capital Partners, LLC, an independent investment adviser and portfolio management firm, with a private debt and diversified asset based strategy. This acquisition comes on the heals of Innovatus’ purchase of VSA Partners, and in preparation for future acquisitions as they seek to develop a global marketing agency. Both Public Label and Match Retail are experiencing positive momentum since the acquisition, and combined with Innovatus’ vision and capital are poised for strong growth.
Brian Cohen, Chief Executive Officer of Public Label and Match Retail said, “Match had a complicated history that, in turn, made any transaction a difficult one to realize. Though we had a focused vision pre-COVID, the path to realization was less clear once the pandemic disrupted our foundations in experiential and retail. G2’s pragmatic approach, experience in my shoes, and deep subject matter expertise were critical to advising us through a complex and dynamic situation. The outcome was exactly what we were looking for, and the process, partner identification and overall understanding of how to get us there exceeded our expectations from beginning to end. I couldn’t be happier with the outcome and the dedicated support and partnership G2 provided.”
“We are honored to have had the opportunity to work with the Board of Directors of Match Marketing Group”, said Matt Konkle, G2’s Senior Managing Director and Head of Industry Teams. “Brian and his team have built a great business that will continue to prosper under the new partnership with Innovatus Capital Partners. We are excited to see what the future brings for the Company.”
About Public Label
Public Label is a North American creative marketing agency. Made up of an inspired group of enthusiasts from all corners of the marketing world, Public Label’s mission is to help brands recognize and align with consumer motivations and cultural movements. Public Label identifies cultural trends, taps into what people already believe in, and builds stronger brand affinity and loyalty. This results in action that drives conversion, ultimately leading to brand growth. For more information, visit www.publiclabelagency.com.
About Match Retail
Match Retail is a leading sales, merchandising and branded retail agency working for major brands across North America. Inspired by an endless desire to help transform brands so they can be retail ready, Match Retail works with tier one clients to drive conversion in traditional shopping environments through enhanced customer experiences. The agency prides itself on top-notch people and best-in-class training to produce unparalleled execution that it measures with pinpoint accuracy. Learn more at www.matchretail.com.
About G2 Capital Advisors:
G2 Capital Advisors provides M&A, capital markets, and restructuring advisory services to the middle market. G2 offers integrated, multi-product, and sector-focused services by pairing highly experienced C-level executives with specialist investment bankers. G2 aspires to be the trusted advisor of choice to its clients including corporations and institutional investors.
CONTACTS ON THIS DEAL:
Matt Konkle, Sr. Managing Director, Head of Industry Teams: T: 317.371.6608 E: [email protected]
Jeff Varsalone, Managing Director T: 516.410.6215 E: [email protected]
Pat Reinhardt, Managing Director: T: 508.287.7065 E: [email protected]
Chris Casteleyn, Director: T: 415.531.3138 E: [email protected]
Matt Powers, Associate: T : 940.395.3714 E: [email protected]
CLIENT
Koffee Kup Bakery (“KKB” or the “Company”) is a manufacturer of baked goods, including bread, donuts, and English muffins, delivering to an established base of high-volume customers in the Northeast and Mid-Atlantic regions. The Company distributes its products to over 4,500 delivery points supported by a 135-route distribution network.
SITUATION
Koffee Kup Bakery, founded in 1940, experienced tremendous growth in 2013 through the acquisition of Vermont Bread Company. The Company is in the process of repositioning its business to capitalize on a compelling platform of established brands, private label partnerships, long-term relationships with blue-chip retailers, and a vast distribution network. The Company sought a financial partner to accelerate its next phase of growth and profitability. KKB is one of largest employers in the state of Vermont, with 500 employees across its three bakery facilities: Brattleboro, VT; Burlington, VT; and North Grosvenor Dale, CT.
ENGAGEMENT
G2 Capital Advisors, LLC (“G2”) served as the exclusive financial advisor to KKB, leading a targeted and efficient sell-side effort focused on finding the optimal partner to support the Company’s long-term growth strategy. G2 and the Company have had a long-term relationship prior to the transaction process including G2 providing financial advisory and liquidity management support.
OUTCOME
Koffee Kup Bakery successfully completed a transaction with American Industrial Acquisition Corporation (“AIAC”) on April 1, 2021. AIAC has significant experience partnering with manufacturing and distribution businesses and is well positioned to continue the expansion of KKB, capitalizing on operational improvements and driving growth momentum forward.
“Prior to the transaction, G2 had been serving as a financial advisor to KKB. Their in-depth knowledge of the company’s needs and shareholders’ criteria allowed G2 to find the best fit for a new investor. Once our shareholders chose the right investor to partner with, G2 put all their efforts towards completing the deal in a timely manner. In the end, the work done by G2 maintained the criteria set out in the LOI and facilitated the entry of a new investor with deep ties in Vermont industry. The completion of this transaction will certainly drive the development of KKB in the interest of all its employees as well as financial partners and suppliers,” said Hubert Aubery, owner of KUPCO
“The success of this transaction is a fantastic example of working with the current majority shareholder, KUPCO, who is committed to their employees. The owners and management team at KKB understood that in order to take their company to the next level, they needed a partner who would not only provide financial support, but operational expertise at the executive level. With AIAC’s commitment to not only providing immediate capital infusions but enriched credit facilities, together KKB & AIAC will uncover substantial operational improvements and ultimately maximize the growth potential of the Company,” said Pat Reinhardt, Managing Director of G2.
About Koffee Kup Bakery:
KKB is a leading, VT-based manufacturer and distributor of branded baked goods. The Company manufactures 325 bread, bun, English muffin, and donut SKUs, which it delivers to over 4,500 delivery points through its Company-operated distribution network. The Company sells its leading brands throughout the Northeast and boasts a diverse and tenured base of over 1,000 customers.
About American Industrial Acquisition Company:
Founded in 1996, American Industrial Acquisition Corporation is an investment firm, based in New York, New York. The firm seeks to invest in the manufacturing, aerospace, automotive, truck, rail, appliance, power generation, mining, oil and gas, packaging, pulp and paper, medical equipment and pharmaceutical sectors.
About G2 Capital Advisors
G2 Capital Advisors provides M&A, capital markets and restructuring advisory services to the middle market. We offer integrated, multi-product and sector-focused services by pairing highly experienced C-level executives with specialist investment bankers. We aspire to be the trusted advisor of choice to our clients including corporations and institutional investors.
CONTACTS ON THIS DEAL:
Pat Reinhardt, Managing Director: T: 508.287.7065 E: [email protected]
Michael Williams, Director, Industrials & Manufacturing: T: 917.523.2164 E: [email protected]
Matthew Ball, Associate: T: 978.914.4421 E: [email protected]
Will Luetmer, Associate: T: 857.449.0236 E: [email protected]
Evan Carlson, Senior Analyst: T: 775.445.0677 E: [email protected]