Target Information

Dave’s Killer Bread, based in Milwaukie, Oregon, is a leading manufacturer and marketer of organic, nutrient-dense sliced breads. The Company has a strong focus on providing high-quality, healthy bread options and has been notable for its unique brand story, which highlights the personal journey of its founders, Glenn, Dave, and Shobi Dahl. Under the leadership of CEO John Tucker, Dave’s Killer Bread has experienced significant growth and innovation in product offerings.

Since the inception of Goode Partners' investment in December 2012, the Company has seen a remarkable sales increase of 130%. Additionally, the distribution network has expanded from just 11 states to a nationwide presence across all 50 states. The strategic measures implemented together with Goode Partners have greatly contributed to the Company’s evolution into a prominent player within the organic bread sector.

Industry Overview

The organic food industry in the United States continues to exhibit robust growth, driven by increasing consumer demand for healthier and sustainably sourced food options. The industry was valued at approximately $50 billion in recent years, with projections indicating continued expansion as more consumers prioritize organic products for their health benefits.

In Oregon, the organic market holds particular significance due to the state's commitment to sustainability and organic farming practices. Local consumers are increasingly inclined to support businesses that align with their values around health and the environment. This trend has notably facilitated the growth of companies like Dave’s Killer Bread.

The organic bread segment specifically has seen substantial growth, stemming from consumer preference for healthier alternatives to conventional bread. This shift is accompanied by an increasing focus on nutritional content, with consumers choosing bread products that are free from artificial additives and preservatives.

The expansion of retail distribution channels, including health food stores, supermarkets, and online platforms, has played a crucial role in amplifying the accessibility of organic bread products. Companies that effectively leverage these channels can significantly enhance their market presence, a feat that Dave’s Killer Bread has achieved under Goode Partners' investment.

Rationale Behind the Deal

The decision for Goode Partners to sell Dave’s Killer Bread to Flowers Foods, Inc. for $275 million illustrates a strategic exit from a successful investment. The impressive return of 3.6 times the invested capital, coupled with an internal rate of return (IRR) of 60%, signifies the growth and enhancement of the Company during Goode's tenure as an investor.

This deal aligns well with Goode's strategy of partnering with high-growth businesses. By facilitating the expansion and market penetration of Dave’s Killer Bread, Goode was able to maximize its investment and create substantial value for shareholders.

Investor Information

Goode Partners LLC is a private equity firm based in New York, specializing in investments within the consumer sector, particularly in emerging brands that exhibit high growth potential. The firm's focus on nurturing entrepreneurially driven companies allows it to implement strategic support tailored to the unique needs of each portfolio company.

Throughout its involvement with Dave’s Killer Bread, Goode Partners played an instrumental role in guiding the company's strategic development and operational improvements, which empowered the management team to execute a successful growth strategy and achieve significant market advancements.

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This transaction represents a noteworthy milestone for both Goode Partners and Dave’s Killer Bread. The successful exit, marked by strong financial returns, is a testament to the effective partnership and operational enhancements implemented during Goode's ownership period. With growing consumer trends favoring organic and health-conscious products, the groundwork laid during this investment has positioned Dave’s Killer Bread to thrive under Flowers Foods' larger distribution capabilities.

From an investment perspective, this deal can be perceived as a highly favorable outcome, driven by the identified market trends in the organic food sector and Dave's robust brand presence. Goode Partners’ strategic foresight in selecting Dave’s Killer Bread as a target underscored its competence in identifying emerging forces within the consumer market.

However, it is essential to consider the competitive landscape that will follow this acquisition. As industry competition continues to intensify, Dave's Killer Bread must adapt and innovate to maintain its market position. Nevertheless, under the backing of Flowers Foods, there are ample resources available to continue driving growth and strategic initiatives.

Ultimately, Goode Partners' ability to exit with such favorable terms exemplifies the effectiveness of their strategic involvement and the potential rewards of investing in high-growth sectors like organic food.

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