E2P Proves that Relationships Matter, Buys Roskam Baking

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