Archives for July 29, 2022

Entrepreneurial Equity Partners (E2P) has acquired Roskam Baking Company and merged the company with Organic Milling, an existing portfolio company of E2P.

The buy of Roskam is the first acquisition for E2P’s second fund, which recently held its first close. In addition, several of E2P’s limited partners co-invested in the buy of Roskam. Roskam has more than two million square feet of manufacturing, warehouse, and office space across six facilities and is headquartered in Grand Rapids, Michigan.

Roskam, led by Bob Roskam, was founded in 1923 and is a fourth-generation family-owned company.

Organic Milling was combined with Roskam in a stock-for-stock merger. Since Organic Milling was a Fund I portfolio company (acquired in November 2021), this was a cross-fund merger and E2P received a fairness opinion to confirm its valuation of Organic Milling.

With the close of these transactions, Roskam now operates as a platform company of E2P and is a contract manufacturer of frozen breakfast foods, snacks, bulk dry baking mixes, granola, candy, frozen pizza dough, and other bakery and bakery-adjacent products.

Mark Burgett, a managing director and co-founder of E2P, has known the Roskam family for more than 20 years. Mr. Burgett, when he was with Wind Point Partners, acquired two businesses from Roskam Baking to form Hearthside Food Solutions. Wind Point sold Hearthside in 2014 to Goldman Sachs and Vestar Capital which, in turn, sold the business to Charlesbank Capital Partners and Partners Group in 2018. Today, Hearthside has more than $4 billion in annual revenues and is one of the largest contract manufacturers in the United States.

“Bob and I met nearly 20 years ago when we were on our respective family vacations in Costa Rica. We’ve stayed in close touch and remained personal friends ever since, which has led to meaningful mutual trust and respect, which in turn has ultimately led to three transactions that were consummated without the involvement of an investment banker,” said Mr. Burgett. The combined revenues of all three acquired businesses total about $1 billion.

“I sought out Mark and the E2P team for a third time because of their deep expertise in contract manufacturing and the reliability they’ve shown as a partner to employees, customers, and the Grand Rapids community,” said Mr. Roskam. “For the past 100 years, my family has grown Roskam into a food manufacturing company with an industry-leading reputation for quality and reliability. I am confident E2P is the best partner to carry on our culture of excellence and long legacy of unmatched customer satisfaction.”

“In this case, we are fortunate to be acquiring the entire balance of the business and intend to maintain the Roskam name, which has an iconic reputation in the industry. The platform is scaled and well-diversified, with over $600 million in sales,” added Mr. Burgett. “Additionally, we simultaneously merged Roskam with our existing portfolio company Organic Milling, which has for over 60 years been a leading contract manufacturer of “better-for-you” granola, snacks, and ingredients for leading brands in the category.”

“We are excited to partner with the incumbent management team, who will play a critical role in helping to drive the next phase of growth at Roskam. This is the first acquisition of a Roskam business where we’ll be inheriting the entire team, which is exciting given their track record of growth,” added Kevin Henneck, a vice president at E2P.

Chicago-based E2P was founded by Mr. Burgett, a former managing director at Wind Point Partners, and CJ Fraleigh, a former CEO of Shearer’s Foods and Sara Lee North America. The firm makes control-oriented investments of $25 million to $150 million in companies that have revenues of at least $50 million. Sectors of interest include established food and beverage products and brands, private label and contract manufacturing, foodservice, and consumer packaged goods.

E2P has a specific interest in investing in family-owned companies. The firm’s first fund closed seven total acquisitions, six of them were family businesses and the seventh was a corporate divestiture. Since 2007, which includes Mr. Burgett’s time at Wind Point, he has acquired 24 family-owned businesses.

Latham & Watkins provided legal services to E2P on this transaction.

© 2022 Private Equity Professional | July 29, 2022

Falcon Affiliates has acquired family-owned Century Linen & Uniform as a new platform in the linen management sector and has completed the add-on acquisition of the New England plant operations (NEPO) from Angelica, a national healthcare linen services provider and a portfolio company of KKR.

Century is a provider of outsourced linen management services, uniform programs, specialty products and value-add services including floor mat service, facility services, and restroom supplies to healthcare, hospitality, and commercial customers across the Northeast regions of the United States.

Century was founded in 1915 as Robison & Smith by Frank Robison and Willard Smith. The company’s early operations consisted of picking up household laundry in Amsterdam, New York by horse and buggy. In 2015, to celebrate its 100-year milestone, Robison & Smith was renamed Century Linen & Uniform. Century is headquartered 50 miles northwest of Albany in Gloversville, New York. The company operates a network of 10 facility locations that service more than 2,000 customer locations throughout New York, Massachusetts, Connecticut, Rhode Island, and Vermont.

Century was acquired by Falcon in partnership with its current CEO and third-generation family owner, Dick Smith, who remains a significant minority shareholder of the company.

“As part of a long-term planning process, the future of this company and our family of employees and customers was of critical importance to me – I was not interested in handing over the keys to a typical ‘private equity’ firm or industry competitor,” said Mr. Smith. “Falcon was different from Day 1. It was clear they understood taking care of our employees and serving our customers is at the heart of everything we do here at Century.”

With the add-on acquisition of Angelica’s New England plants, Century’s operating footprint now extends from New York state through Massachusetts, Connecticut, Rhode Island and directly into the Greater Boston area. Century reports that within these geographies are numerous top-ranked healthcare and hospital facilities.

“With Falcon’s solid track record of growing businesses over the long-term and supporting their management teams, Century is positioned better than ever before to pursue new opportunities and initiatives,” added Mr. Smith.

“Falcon is excited to invest in and partner with Century, Dick, and the management team to help drive the company’s next chapter of growth,” said Joe Benevento, the managing director of Falcon Affiliates. “Century provides an essential service to its customers and has always taken immense pride in doing so. When it comes to quality, reliability, and responsiveness at the local level, Century has led the way for over 100 years, as evidenced by its long-standing customer relationships, top service and delivery metrics, and ongoing investment in modern facilities and equipment.”

“At Falcon, we focus on human capital, not just financial capital. The foundation of Century’s success has clearly been its people and we look forward to continuing to grow and re-invest in Century’s people, operations, and customers,” added Mr. Benevento.

Falcon Affiliates is an investor in family-owned or founder-led businesses that have $15 to $100 million of revenue and $2 to $10 million of EBITDA. Sectors of interest include value-added distribution, light manufacturing, industrial services and business services. Falcon Affiliates, led by President Will Krusen, is headquartered in Richmond, Virginia, with an additional office in Tampa, Florida.

PNC Mezzanine Capital and Bank of America provided financing to support the acquisitions of both Century Linen and NEPO.

EdgePoint was the financial advisor to Century Linen on this transaction.

© 2022 Private Equity Professional | July 29, 2022