“What Happens When Your Dream Comes True?”
One of the many outcomes of starting a food processing business is to sell it to a larger concern. This outcome is not easy to achieve. Depending on the product category, a larger company may just copy the product. On the other hand, if your product has developed any kind of brand awareness among consumers, the larger company may find it easier, and less expensive, to make you an offer. The Tidewater Group’s Bill Zimmerman, who specializes in specialty food mergers and acquisitions, believes that most specialty food company owners do not know how to manage both sales and the bottom line. In Zimmerman’s opinion, this becomes a critical issue at $5 million in gross revenues. To attract buyers, such companies need to develop a balance sheet where the liability side is not disproportionate to the asset side.
In addition, many specialty food processors offer only regional food products. If this positioning persists, it limits buyout possibilities. Buyers will need to know what it will take to expand to other regions. Growth of regional cuisines has fueled the market. There is no well-defined New England cuisine, for example. Also, there appears to be no well-defined, non-frying, Southern cuisine. International and ethnic foods are becoming very popular. These flavor profiles impact food development and should be taken into account when positioning your product and company.
Mergers Active But Not Frenzied
Notable buyouts in the specialty food industry during the past decade include the Peloponnese line of Greek specialties to Hormel, Brown Adobe and Carolina Swamp Stuff to Wagners, Nonni’s Biscotti to Silverado, and the award-winning Seckinger Lee line of biscuits to Byrd Cookie Company. To help you learn how this happened to one company, FE interviewed Seckinger Lee’s cofounder, Beverly Seckinger, whose company was sold to Byrd in 1997.
A PRIME EXAMPLE - The Seckinger-Lee Company
The Seckinger Lee Company boasts it is the originator of bite-sized cheddar biscuits. Founded in 1985 by Beverly Seckinger and Lee Bufford, the firm started baking in a rented catering space. The product line grew from their Original Cheese Biscuits to a multi-million dollar, full line of five flavor varieties that are sold in markets around the world. Seckinger-Lee Gourmet Biscuits are sold in fancy food stores, fancy department stores, and gourmet retail outlets. The products are served on Delta Airlines and at The Ritz Carlton and Four Seasons hotels.
FE - How did you differentiate your product from the competition?
Beverly Seckinger (Bev) - Seckinger-Lee products have always been considered unique. Customers and consumers alike have told us our quality, product consistency and service are the best. These things, along with our never-ending support (product sampling, personal appearances, etc.) seemed to be what kept customers coming back. [FE – Beverly’s real point is that her company introduced a product that was previously unavailable in the market. There are now more than a dozen fancy cheese biscuit products on the market.]
FE - Was the sale part of your original business plan? If so, how did you structure the company to make it appeal to a larger company?
Bev - No. The sale was not in our original plan. As a family business, we never considered selling. We were so wrapped up in the development of new tastes, packaging and special promotions that we did not give quite enough time or thought to company positioning. Because of our reputation in the marketplace, along with an extremely well placed group of customers, Seckinger-Lee was always appealing to larger companies. Larger companies approached us initially in 1987. We finally listened. [FE - Neither partner envisioned positioning their company for acquisition.]
FE - Did the purchase coincide with the growth of the biscuit food category?
Bev - Yes. Over the past several years, this category has shot up rapidly and become much more competitive. [FE - Seckinger-Lee was on top of the heap by being the first in its category.]
FE - Did you seek out the buyer, or where you approached by the buyer?
Bev - We were approached by, and received offers from, two other companies in 1996. That was when we called Byrd Cookie Company’s Benny Curl. I really wanted to see if he had any interest before deciding between the other offers. I felt that I wanted another family owned business, founded in the Southern heritage from which Lee and I came. He was interested, made an offer in two weeks, and we closed thirty days later. We had to make this work for both parties, and I can say it was a great marriage of the two leading gourmet snack and cookie lines in our market. Sometimes, the best union of companies is the one that involves complementing product lines. That was our case. Benny plans to leave the Seckinger-Lee name in place and run the two lines separately. Lee and I will only be working as consultants.
FE - What are the down sides? Has the product quality been comprised in any way?
Bev – “Byrd handles all day-to-day operations as the two bakeries run side-by-side in Savannah. It is really too soon to know if quality has been comprised. I can only say that one of the reasons I contacted Benny Curl was because of his fine reputation for quality and sincere honesty. That speaks for itself as to his commitment to keep Seckinger-Lee’s product line just the same is one best!
FE - How would you characterize customer response to the new ownership?
Bev – “Customers have been very responsive. Naturally, the customers who had been accustomed to our S-L staff are loyal and have shared disappointment that we will be gone. On the other hand, the customers who buy from both S-L and Byrd say, this is great! Now we can call one place and order the best lines in the market. That makes Benny, Lee and me happy.”
Beverly Seckinger reports that she had always joked about wanting to retire at age 45. I do not see myself out of the working world for long. I plan to travel and take action on what many might consider a “dream come true.” The sad part of this recent sale comes from the emotional side. I am finding it very difficult to not worry! I have come to realize that operating a business, any business, means a constant struggle and thinking about every aspect of growth. I had a wonderful team whom I miss very much. They were like members of my family. With time, what I will see and feel will be a great product that carries my name being managed by another family such as Byrd.
Stephen F. Hall