Baking&Snack - May 2013 - 66

Q&A: FINANCIAL INVESTMENT
Richard Boos

Ryan McKenzie

When it comes to investing in the baking and snack industries,
Chicago-based Arbor Investments looks for middle-market companies — those with $300 million and under in annual sales — that are
family- or entrepreneurial-owned and looking to take their businesses
to the next level. They’re companies like Gold Standard Baking, a
producer of frozen and fresh croissants, Danish and other laminated
products, started by the Caparos family in Chicago, or Dallas-based
Truco Enterprises that’s run by entrepreneur David Silver and that
markets On The Border and other ethnic foods. Arbor Investments

provides liquidity and works with the individual management groups
to make sure the companies have the tools and direction to grow.
During the past 14 years, Arbor has invested in more than 30
companies and sold off 64% of them — most in six years or less.
In our exclusive report, Editor Dan Malovany interviewed Ryan
McKenzie and Richard Boos, partners with Arbor, about its operating strategies and what attracts the firm to acquire and invest in
the food and beverage industries. For more information on Arbor
Investments, visit www.arborpic.com.

Building Better
Businesses
Dan Malovany: What is Arbor’s
philosophy when it comes to
investing in companies, and how
is it different from others?
Ryan McKenzie: We look for companies
that have a strong management team operating in a defensible niche within the food
and beverage industries. Since our founding in 1999, we have had a disciplined segment focus on food and beverage — something other firms have only recently begun
to embrace. We work with the management team to take the company to the next
level of development. Given our exclusive
focus on food and beverage companies, we
believe we offer a compelling value proposition to owners seeking a partner through
our extensive Rolodex and experience in
the space.

Who are the investors behind
Arbor, and what are your goals?
Richard Boos: Our investor base is composed of a variety of institutional investors, including pension funds, university
endowments and fund of funds, as well as
a number of high-net-worth individuals.
Our primary goal is to use our capital to
add value and grow leading companies in
the food and beverage space while generating superior returns for our investors.

/ Baking & Snack / May 2013

Why one private equity firm buys
into mid-market food and beverage
companies and collaborates with
management teams to create
value for investors.

What attracts Arbor to small- to
mid-size companies in the
food industry?
Mr. Boos: Our team consists of lifelong
food and beverage professionals with deep
experience, expertise and contacts in the
industry. We believe our unique position
as the market maker and leading financial
sponsor within the middle-market food
and beverage industries allows us to serve
as a growth catalyst for companies that
are at a pivotal point in their existence.
Through generating new customer opportunities, inserting strategic planning
processes, reinforcing management team
depth and providing unparalleled functional discipline support, we have successfully assisted more than 30 middle-market
food and beverage companies in achieving
their full potential.

What attracted you to invest in
companies like Gold Standard and
Truco Enterprises?
Mr. McKenzie: We are a strong believer in
the importance of chemistry when selecting a business partner. Over time, we were
able to build meaningful relationships
with the Caparos family (owners of Gold
Standard Baking) and with Dave Silver
(owner of Truco Enterprises). The trust we

developed allowed for smooth transitions
into both partnerships. Furthermore, we
provided the right solution to the sellers
in both instances: liquidity with continued
equity participation to the Caparos family
at Gold Standard and liquidity and continued management responsibilities to Dave
Silver at Truco.

What would not be a good fit
for Arbor Investments?
Mr. McKenzie: Companies with no tie-in
to the food and beverage space or companies with more than $100 million in
EBITDA would not be good fits with
Arbor. Furthermore, we tend to avoid
companies with a commoditized end
product that provides little to no value add.

What is your strategy for developing value with these companies?
Mr. Boos: After acquiring a company, we
immediately embark on an intensive strategic planning process to establish goals
and implementation plans. We then insert
our functional discipline team to install
state-of-the-art accounting and information
systems. Next, we work with the existing
management team to augment management
depth wherever necessary, often pulling
from our operating partner team or our net-

www.bakingandsnack.com

http://www.arborpic.com http://www.bakingandsnack.com

Baking&Snack - May 2013

Table of Contents for the Digital Edition of Baking&Snack - May 2013