Among the most active merger and acquisition (M&A) companies is San Francisco-based GrubMarket, Inc., BB #:301166 a technology company known for its software-as-a-service platform WholesaleWare.
GrubMarket has made a number of high profile purchases in the last few years, including Custom Produce Sales of Parlier, CA, in March.
Going back to 2022, GrubMarket purchased Spring Valley Produce, Inc. and its Produce Connection branches in Nogales, AZ and McAllen, TX; J.C. Produce, Inc. of Vernon, CA; Daylight Foods, Inc. in Union City, CA; Quality Fruit & Vegetable Company of El Paso, TX; and SunFed, with locations in both Nogales, AZ and Edinburg, TX.
Purchases in 2021 include Bengard Marketing, Inc. of Dominguez Hills, CA; Sierra Produce of Orange, CA; and Shapiro-Gilman-Shandler Company in Los Angeles, CA.
DRIVING THE TREND
The reasons for M&A deals vary. For a private equity firm, the typical reason is simply a desire for a strong return on investment.
Acquired firms, meanwhile, can be looking for funding to drive further growth, help achieve strategic goals, enable founders to retire while the company remains in business, or keep a struggling business alive.
In an acquisition or merger involving two produce industry companies, both of the organizations can benefit from distribution collaboration and enhanced efficiencies, product line expansion, sharing high-tech tools, adding property or assets, or new capabilities.
Strategic mergers and private equity investments can make sense and be advantageous to both parties, depending on the circumstances.
“Late last year, Russ Davis Wholesale, Inc. BB #:100699 of Wadena, MN announced its acquisition of like-minded wholesaler Liberty Fruit Company, Inc. of Kansas City, KS,” says Michael Erdman, president of the Howard Sheri Corporation in Deerfield, IL, an M&A intermediary.
“Russ Davis Wholesale looks to benefit from various operational and distribution synergies, while Liberty Fruit employees will be joining a 100-percent employee-owned company.”
On the private equity side, earlier in 2022, Los Angeles-based Kingswood Capital Management, LP acquired the Modesto, CA-based grocery chain The Save Mart Companies BB #:113903.
“Management and employees alike who have brought value to Save Mart will likely enjoy increased job security with this acquisition,” Erdman explains.
“While deal terms are private, if structured as a recapitalization, Save Mart’s owners likely retained some equity that could provide them with a second payday in the coming years if the company’s revenues and earnings grow as expected.”
This is an excerpt from the cover story in the July/August 2023 issue of Produce Blueprints Magazine. Click here to read the whole issue.