Deals, deals, deals…in the world of family business

If the first ten days of the new year are anything to go by, deals in the family business sector are in for a bumper 12 months in 2018. Four deals were done in that short period, with the most high profile being the acquisition of a 290-year-old UK family business and cider maker called Aspall by US brewing giant Molson Coors.

Other deals in the family business sector in the last ten days were:

• The acquisition of Atlanta Cheesecake Company, a family-owned Georgia-based maker of high-end frozen cheesecakes, by Dessert Holdings, an umbrella company that consists of several US premium dessert companies and brands.
• The acquisition of Dunlap RV, a family-owned recreational vehicle business based in Tennessee, by Family RV, a Cincinnati-based RV dealership, which itself is owned by a family office called Kidd & Company, based Connecticut.
• Robern Menz, a fourth generation family-owned Australian confectionery company, bought a local iconic chocolate brand called Violet Crumble from Nestle.

The Aspall deal suggests family-owned brands with considerable provenance will be targeted more than ever. Although one private equity manager played down the family aspect of the deal with Molson Coors. “The family angle is a ‘nice to have’, but not a driver,” she says. The deal was likely to be driven more by Molson Coors efforts to diversify away from traditional beer drinks, she added.

Regardless, family businesses like Aspall will often be the targets of big multinational in their efforts to diversify both from their core product and geographical perspective. Other deals will be driven by the desire for greater market share for the acquiring businesses.

Also, the Robern Menz purchase shows that the flow isn’t all in one direction – towards big multinational businesses. Smaller family businesses looking to consolidate and diversify themselves will be seeking deals as well.

And one thing is for sure, private equity, with a lot of family office money, is more flush than ever with funds to do deals.  The global private equity industry raised a record $453 billion from investors in 2017, which surpassed the previous landmark of $414 billion achieved in 2007, according to the industry tracker Preqin. Adding the funds from the last few years that have yet to be allocated, private equity houses have more than $1 trillion at their disposal.

Much of that huge warchest will be targeting family businesses in the years ahead.