Target Information

Benford Capital Partners ("Benford Capital" or "BCP"), a prominent private equity firm focused on the lower middle market, has successfully sold Saco Foods ("Saco" or "the Company") to Fengate Private Equity and Weathervane Investment Corp. Saco, a leading branded food products company, primarily supplies supermarkets and mass retailers across the United States. The transaction was finalized on January 8, 2024.

Founded in 1973 and headquartered in Middleton, WI, Saco Foods has established itself as a significant player in the shelf-stable food products sector with a diverse portfolio of niche, market-leading brands. Its notable brands include Dolci Frutta, a leading name in confectionary chocolate dips; California Sun Dry, renowned for sun-dried tomato products; Saco Pantry, recognized for powdered baking ingredients; Solo Foods, which specializes in pastry fillings and nut pastes; and Hoosier Hill Farm, a direct-to-consumer provider of baking ingredients and snacks.

Industry Overview

The U.S. food products industry is experiencing robust growth, driven by shifting consumer preferences towards convenience and quality. The demand for shelf-stable products has particularly surged due to increasing consumer interests in cost-efficient and longer-lasting food items. As supermarkets and mass retailers expand their product offerings to meet these demands, companies like Saco Foods are well-positioned to capitalize on these trends.

Additionally, eCommerce growth has transformed how food products are marketed and sold. With an increasing number of consumers opting to shop online for groceries, companies that efficiently integrate eCommerce into their business models find substantial opportunities for growth. Saco’s strategic initiatives in expanding its eCommerce capabilities reflect an understanding of this evolving landscape.

The impact of health-conscious eating trends has also transformed the food sector. In response to consumers seeking healthier and more sustainable options, brands that prioritize quality, sourcing transparency, and innovative products are gaining a competitive edge. Saco's portfolio, featuring organic and natural products, caters to this growing market.

Lastly, the sector anticipates future investments and technological advancements focused on improving production processes, supply chain efficiency, and product delivery. As larger players continue to merge and acquire niche companies, the competitive environment is likely to tighten, presenting both challenges and opportunities for companies like Saco.

Rationale Behind the Deal

The decision for Benford Capital to sell Saco Foods aligns with their strategic objectives to maximize value from their portfolio by partnering with investors who possess the capacity to continue Saco's growth trajectory. Over their investment period, BCP significantly contributed to Saco's expansion through organic growth initiatives and targeted acquisitions, which notably increased the Company's overall valuation.

By transitioning to Fengate Private Equity and Weathervane Investment Corp, Saco gains access to new resources, expertise, and capital that are crucial for its ongoing expansion, particularly within the evolving eCommerce and health-conscious markets. This strategic move positions Saco for sustained growth and innovation.

Investor Information

Benford Capital Partners, founded in 2004 and based in Chicago, focuses on acquiring and developing leading lower middle market companies in collaboration with founders and management teams. The firm has a commendable track record, having acquired 50 companies and currently managing 16 platform companies. With approximately $350 million in total capital, BCP is actively investing from its $200 million Fund II, which includes interests in sectors such as industrial technology, consumer products, and agriculture.

Fengate Private Equity and Weathervane Investment Corp are recognized investors with a strong reputation for fostering growth within their portfolio companies. Their partnership with Saco is expected to provide not only financial backing but also strategic insights aimed at optimizing Saco’s market presence and operational efficiency.

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Dealert believes that the sale of Saco Foods represents a strategic and timely investment opportunity. Benford Capital's successful stewardship over the past seven years highlights their capability in scaling businesses and identifying lucrative add-on acquisitions. Their approach to driving significant growth through organic initiatives and strategic partnerships is commendable and indicates a thoughtful investment philosophy.

Moreover, Saco's solid performance and strong brand portfolio within a growing segment of the food industry make it an attractive acquisition for Fengate and Weathervane. Given the shifts in consumer behavior, particularly the preference for online shopping and quality products, Saco stands to benefit from the investments in these areas.

While the competitive landscape in the food products market continues to evolve, Saco's strategic direction, backed by experienced investors, suggests a favorable outlook for the Company's future. Their ability to innovate and adapt will be crucial in maintaining market leadership.

In conclusion, this deal appears to be a promising investment for Fengate and Weathervane, as it positions Saco Foods to further capitalize on market trends and consumer demands, ultimately driving sustained growth and profitability.

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