With the end of the year fast approaching thoughts are turning to what food to stock in fridges to get through the festive period. This morning, we take a look at what’s been driving private equity interest in food and beverage companies this year.
Next we have IK Partners becoming the latest private equity firm to invest in an accounting business, as it agrees to acquire a majority stake in a company from Horizon Capital.
Finally, we have Lonsdale Capital Partners investing in two new healthcare buy-and-build platforms in the private homecare and dental sectors.
Changing tastes
The food and beverage sector has had to adapt to changing customer spending due to inflation and interest rates, writes PE Hub’s Nina Lindholm this morning. Private equity has managed to find attractive trends within the market, despite these challenges, and the sector has seen plenty of deal activity in 2024.
That pace is set to continue, according to James Scallan, managing director at investment bank Houlihan Lokey. “Suppose inflation remains cool and interest rates stabilize,” said London-based Scallan. “In that case, we can expect to see a continued resurgence in dealmaking, particularly from private equity, which has been patiently waiting for the right moment to re-enter the market.”
Lower interest rates would make leveraged buyouts more attractive, Scallan said, adding that as inflation eases, investor confidence in profit sustainability will improve, unlocking more opportunities and levers for growth.
Nina rounded up three key trends that drove PE-backed deal activity in the food and beverage sector in 2024 – here’s the first.
Frozen food deals heat up
As consumers prioritize convenience and lower cost options, deals involving frozen foods have increased in volume. In a September deal, Brynwood Partners acquired Miracapo Pizza Company, a frozen pizza maker headquartered in Elk Grove Village, Illinois. The seller was CC Industries.
The mid-market investor, based in Greenwich, Connecticut, is no stranger to investing in pizza businesses, as it has previously held private-label pizza and sauce manufacturer Richelieu Foods in its portfolio, and is currently invested in Great Kitchens Food Company, a manufacturer of frozen pizza, flatbreads and calzones.
Businesses looking to lower production costs and speed up processes also benefit from frozen products. In March, CVC announced an investment in Grupo Monbake, a frozen dough and bakery café products producer based in Mutilva, Spain.
Check out the full article for the other two trends.
Accounting play
Private equity firms are snapping up accounting companies at a rapid clip.
This morning, IK Partners agreed to acquire a majority stake in Dains Accountants, a provider of accounting and business advisory services in the UK, from Horizon Capital.
Established in 1926 and based in Birmingham, Dains services SMEs in the UK and Ireland. It has 765 employees and a diversified customer base of over 17,000 clients.
Horizon invested in Dains in 2021 and has since made 10 strategic acquisitions, according to a release.
IK’s investment will include support for Dains to accelerate its inorganic growth through partnering with complementary firms across the UK and Ireland, the release said.
The deal follows Cinven last month agreeing to buy a majority stake in Grant Thornton UK, a diversified professional services company providing audit, tax and advisory services in the UK and one of the biggest accounting companies in the country.
Private equity firms are keen to buy accounting companies thanks to the industry’s stable and recurring revenue streams, Andrew Wingfield, private equity M&A partner in the London office of international law firm Proskauer, told PE Hub in a roundup of accounting deals back in October.
Buy-and-build
Lonsdale Capital Partners has invested in two new healthcare buy-and-build platforms in the private homecare and dental sectors.
It has established Senior Home Care Group, a new platform focused on the UK private homecare market.
The UK private homecare market is valued at more than £10 billion ($12.7 billion; €12.0 billion), a statement read.
SHCG will pursue an M&A driven growth strategy alongside the organic roll out of branches, according to a statement.
