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Food and Beverage M&A
An Insider’s Guide to Selling a Food or Beverage Manufacturing, Distribution, or Grocery Business
Questions Answered in This Book
- What will I do with my time when I sell my business?
- Have I had my business appraised recently?
- Have I had my business appraised recently?
- Would selling your business make you happier?
- Are you truly committed to selling your business, or have you decided on a whim?
- Are indirect competitors threatening to permanently change the structure of my industry?
- Is your business growing and staying competitive, or is it in a slow decline?
- Why don't some businesses sell, and what can you do to ensure a successful sale and maximize the price of your company?
- What if you want to stay involved in your business?
- How are disputes normally handled?
Overview
The sale of your business will be one of the most stressful events of your life. Don’t be blindsided. Food and Beverage M&A – An Insider’s Guide to Selling a Food or Beverage Manufacturing, Distribution, or Grocery Business is the most comprehensive resource available today on selling food or beverage companies. This handbook walks you through the entire process of selling a company in the food and beverage industry. It contains proven advice on reducing risk and maximizing value before you begin the sales process, although you will benefit from my guidance even if your transaction is well underway. They say selling a business is an art. I’ve turned it into a science.
Most M&A books are written for companies operating in any industry. They provide general advice to owners of companies regardless of their sector. This book is different. Food and Beverage M&A is written explicitly for owners of food and beverage businesses in the middle of the supply chain, including manufacturing, processing, packaging, distribution, and retail.
I wrote this book for entrepreneurs, but it’s also an essential reference source for attorneys, accountants, investors, corporate development professionals, consultants, lenders, and professional advisors. Regardless of your role in the sales process, this must-read roadmap offers expert, practical guidance. Food and Beverage M&A provides everyone involved with proven strategies for making sound decisions each step of the way.
Food and Beverage M&A covers every stage of the sales process, from making the decision to sell through to cashing the check. It offers a broad and in-depth look at the M&A landscape. It also includes numerous real-life examples from the food and beverage industry and what can be learned from them – all presented in an easy-to-understand, user-friendly style. You’ll receive actionable steps to take and techniques to be aware of when considering the capitalization, growth, and sale of your company or for positioning your business for maximum value before going to market.
Read about market trends, perspectives, and strategies affecting transactions in all phases. You’ll learn about the processes and core subject areas – including valuation, structure, taxation, and due diligence – required to successfully navigate and close transactions in the industry. You’ll gain a solid understanding of the strategies most commonly used by buyers and how to handle them.
Table of Contents
Front Matter
- Acknowledgments
- Meet the Expert
- Preface
- A Few Important Notes
- Acronyms
- Additional Resources
Chapter 1: History: Global Food Production
- 9000 B.C. to 1000 B.C.
- 1000 B.C. to 1 B.C.
- A.D. 1 to A.D. 1000
- A.D. 1000 to A.D. 1700
- 18th Century
- 19th Century
- 20th Century
- 21st Century
Chapter 2: Statistics: The Industry by the Numbers
- Food and Beverage – Environmental and Social Statistics
- Consumption and Demand Statistics
- Global Food and Beverage Industry Statistics
- U.S. Food and Beverage Industry Statistic
Chapter 3: M&A: Food and Beverage Acquisitions From 2010 to 2022
- Food and Beverage Acquisitions by Private Equity Firms
- Acquisitions by Corporate Buyers
- Partial List of Some of the Largest Acquisitions by Year
Chapter 4: Trends: Changes Affecting the Industry
- Trend 1: Convenience
- Trend 2: Wellness
- Trend 3: Transparency
- Trend 4: Sustainability
- Trend 5: Food Waste Reduction
- Trend 6: Food Exploration
- Trend 7: Supplements
- Trend 8: Technology
Chapter 5: The Decision To Sell
- Consideration 1: Your Goals
- Consideration 2: Internal Factors
- Consideration 3: External Factors
- Consideration 4: Value and Options
Chapter 6: The Decision To Grow
- Look Outward – To the State of Your Niche
- Look Inward – To Yourself
- Reasons To Grow
- Reasons To Sell
- Be Prepared To Adapt
- Funding Growth
Chapter 7: Exit Scenarios
- Involuntary Exit Options
- Inside Exit Options
- Outside Exit Options
- Operational and Legal Implications
Chapter 8: Preparing for the Sale
- The Importance of Preparation
- Lessons From Failed Deals
Chapter 9: The Sale Timeline
- Variable 1: Subsector
- Variable 2: Industry Appeal
- Variable 3: Marketing Strategy
- Variable 4: Economy
- Timeline for Selling a Business
Chapter 10: Preparing Employees for the Exit
- To Tell or Not To Tell
- Keeping Your Team on Board
- When a Non-Compete Won’t Do
Chapter 11: Measuring Cash Flow
- Adjusting Your Financial Statements
- How to Use EBITDA
Chapter 12: The Elements of Valuation
- The Human Element
- Valuation Process
- Standards of Value
- An Inexact Science
- Availability of Information
- The Past vs. The Future
- Diverse Buyer Criteria
- Deal Structure and Personal Needs
Chapter 13: EBITDA Multiples
- Return on Investment
- Food and Beverage Multiples
- How Multiples Are Used
- Factors That Affect the Multiple
- Shortcomings of Using Multiples
- Working with Multiples
- Calculating ROI
Chapter 14: Valuation Methods
- Method 1: Multiple of EBITDA
- Method 2: Comparable Transactions
- Other Factors to Consider
- Valuing Blue Sky
Chapter 15: Business Appraisers
- Appraisal Process
- Appraisal Report
- Appraisal Methods
- Appraiser Type
- Appraisal Cost
- Middle-Market Appraisal Case Study
Chapter 16: Value Drivers
- Collection of Factors
- Risk vs. Return
- Focus on What Drives Value
- What Can Impact Value vs. What You Can Do About It
- Summary of Value Drivers
Chapter 17: Prioritizing Value Drivers
- Completing the Value Driver’s Model
- Example Return on Value Driver’s Model
- Comments on the Model
- Tips for Completing the Model
Chapter 18: Products
- Ability To Replicate
- Brand Name
- Growth Potential
- Product Lineup
- Scalability
- Product Dependencies
- Sell-Through
Chapter 19: Customers
- Marketing and Advertising
- Customer Mix
- Customer Dependencies
- Customer Relationships
- Customer Agreements
- Sales Pipeline
Chapter 20: Financial Metrics
- Gross Revenue
- EBITDA
- Gross Margins
- Cash Flow
- Working Capital
- CapEx
- Quality of Financial Records
Chapter 21: Stakeholders
- Ownership
- Team
Chapter 22: Operations
- Systems
- Real Estate
- The Lease
- Facilities
- Equipment
- Suppliers
- Inventory
- Insurance
- Legal Issues
Chapter 23: Assembling an M&A Team
- M&A Advisors
- M&A Attorneys
- Accountants
- Building Your Team
Chapter 24: Steps Before Going To Market
- An Intro to the Phased Release
- Investment Teaser
- The CIM
- Quality of Earnings Analysis
- The Data Room
- What Information to Share and When
Chapter 25: Ensuring Confidentiality
- Preventing Leaks
- Selective Disclosure of Information
- Negotiating and Signing an NDA
Chapter 26: The 3 Types of Buyers
- An Intro to the 3 Types of Buyers
- Type 1: Financial Buyers
- Type 2: Corporate Buyers
- Type 3: Individual Buyers
- Key Points
Chapter 27: The Buyer Search
- Building Your Buyer List
- The Ideal Buyer
- Obtaining Contact Information
- Working Your Network
Chapter 28: First Contact With the Buyer
- Contact Low-Risk Buyers First
- Tips for Screening Buyers
- Ensure the Buyer Is Qualified
- Release Information in Phases
- Consider When to Release Information
- Control How Information Is Released
- Customize Your NDA
- Separate the Wheat From the Chaff
Chapter 29: Nailing the Buyer Meeting
- Next Steps After the Meeting
- Next Steps After the Meeting
- Researching the Buyer
Chapter 30: Negotiating Elements
- Preparation
- Negotiating Posture
- Emotional Objectivity
- Stamina
- Communication Skills
- Honesty and Humility
Chapter 31: Overview of the Letter of Intent
- The Term Sheet
- Buyer’s Strategies
- Components of the LOI
- Undefined Terms
- Comparing Offers
- Major Characteristics of the LOI
- The LOI Is Not Written in Stone
Chapter 32: Analysis of an LOI
- Major Clauses
- Introductory Paragraph
- Binding vs. Non-Binding Provisions
- Purchase Price and Terms
- Working Capital
- Key Dates and Milestones
- Confidentiality
- Due Diligence
- Exclusivity
- Good-Faith Deposit
- Allocation
- Legal Form of Transaction
- Escrow Holdback
- Representations and Warranties
- Contingencies
- Covenants
- Seller’s Role After Closing
- Non-Compete
- Termination
- Miscellaneous Clauses
Chapter 33: Negotiating a Favorable LOI
- Retain the Balance of Power
- Take Your Time Before Signing
- Move Fast After Signing
- Prevent Re-Trading
- Focus On Running Your Business
- Read the Buyer
- Prepare for Due Diligence
- Maintain Confidentiality
- Disclose Issues Early
- Be Thorough in Negotiating the LOI
- Define Working Capital
Chapter 34: Overview of Transaction Structure
- Primary Components of Transaction Structure
- Typical Transaction Structures
- Maximizing Transaction Structure
Chapter 35: Financial Components of Transaction Structure
- Cash
- Long-Term Liabilities
- Seller Financing
- Third-Party Financing
- Equity
- Earnouts
- Royalties and Licensing Fees
- Employment and Consulting Agreements
- Escrow Holdbacks
Chapter 36: Legal Components of Transaction Structure
- Asset Sale vs. Stock Sale vs. Merger
- Successor Liability
- Entity Type and Transaction Structure
Chapter 37: Tax Implications and Transaction Structure
- Allocating the Price for Tax Purposes
- Tips for Allocating the Price
- Asset Sales vs. Stock Sales
Chapter 38: The Due Diligence Process
- Preparing for Battle
- A Primer on Diligence
- Preparing for Due Diligence
Chapter 39: The 4 Types of Due Diligence
- Type 1: Financial
- Type 2: Operations
- Type 3: Legal
- Type 4: Human Resources
- Sample Due Diligence Checklist
Chapter 40: The Purchase Agreement
- A Tool for Allocating Risks
- The Parties’ Conflicting Objectives
- Key Elements of the Purchase Agreement
- Hammering Out the Agreement
- Legal Transaction Form
- Supporting Documents
- Negotiating the Non-Compete
Chapter 41: Representations and Warranties
- Basics of Reps and Warranties
- Importance of Reps and Warranties
- Purposes of Reps and Warranties
- Seller’s vs. Buyer’s Representations
- Covered Parties
- Negotiating Reps and Warranties
- Reducing Your Exposure
- Limitations to Reps and Warranties
- Sample Representations, Warranties, and Covenants
- Indemnification
Chapter 42: The Closing
- Preparing Emotionally for Your Next Stage
- Final Steps Before the Closing
Conclusion
- Additional Resources
Appendix: M&A and F&B Glossary
Food and Beverage M&A
An Insider’s Guide to Selling a Food or Beverage Manufacturing, Distribution, or Grocery Business
About the Author
20+ Years of M&A Experience: Over 20 years of experience facilitating mergers, acquisitions, sales, and other business transfers with transaction values up to $500 Million.
300+ Transactions: Successfully participated in or managed the sale of over 300 privately held companies representing both buyers and sellers in North America, Central America, South America, Europe, and Asia.
Author of 6 Books on M&A: The Art of the Exit, A Beginner’s Guide to Business Valuation, The Exit Strategy Handbook, Closing the Deal, Acquired and Food & Beverage M&A
Host of M&A Talk: Host of the #1 podcast on mergers and acquisitions – M&A Talk.
Host of Food & Beverage Talk: Host of the #1 podcast on mergers and acquisitions specializing in the food & beverage industry – Food & Beverage Talk.
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