Michael’s Finer Meats and Seafoods is a leading processor and distributor of premium-quality meat, seafood and poultry served in fine steakhouses, seafood restaurants and upscale casual dining restaurants. Based in Columbus, Ohio, the company was founded in 1962 by entrepreneur Michael Bloch, who remains actively involved in its operations. Utah-based private equity firm Sorenson Capital acquired a majority stake in Michael’s in 2007.
- Challenge
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From humble beginnings supplying premium cuts of meat to a handful of Columbus-area restaurants in the 1960s, founder Michael Bloch successfully grew Michael’s Finer Meats into a leading purveyor of a wide range of “center of the plate” proteins. Today, the company has more than 800 restaurant customers across Ohio and more than a dozen other states.
After more than 40 years of success, Michael Bloch and his son, company President John Bloch, were ready pursue several strategic growth opportunities to take their family-owned company to the next level of performance. In 2007, they began to explore the possibility of selling part of the company to an equity partner to help with estate planning.
The Blochs wanted to find a business partner that understood the food service distribution industry and recognized the value of Michael’s successful business model, strong brand reputation and loyal customer base.
But capital markets tightened while Michael’s was on the market and some observers worried that a slowing economy would reduce profitability at the high-end restaurants that are Michael’s main customers. These factors added to the challenge of finding the right buyer, negotiating the right price, funding the acquisition and closing the transaction successfully.
- Solution
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As they contemplated a sale, the Blochs sought advisory assistance from Edgeview Partners. A CIT company, Edgeview Partners is a leading investment bank that focuses on middle-market companies. About one-third of the firm’s engagements involve closely held companies, including family-owned businesses such as Michael’s. Edgeview has a reputation for running sale processes that identify buyers who will pay full value and match up well with shareholders’ objectives.
After a marketing process that put the deal in front of several potential partners, Edgeview Partners identified Sorenson Capital, a leading private equity firm that already had a regional meat supplier in its portfolio, as the most suitable candidate to purchase a share of Michael’s. During negotiations, Michael’s and Sorenson Capital agreed on a price and terms that were acceptable to both parties.
Sorenson Capital also chose CIT as lead arranger on the financing for the Michael’s acquisition. CIT is a leading provider of senior debt, second lien, subordinated debt securities and equity co-investments for private equity-backed transactions.
The two companies had a relationship that dated back to 2006 when CIT provided financing for Sorenson’s acquisition of Mity Enterprises, a furniture designer and manufacturer.CIT Sponsor Finance and Food and Agribusiness team members had the industry expertise to recognize the underlying value of Michael’s in spite of challenging market and economic conditions. CIT was able to keep the terms of the transaction stable at a time when many other lenders were withdrawing offers or changing terms because of volatile market conditions.
- Results
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Sorenson Capital acquired a majority stake in Michael’s Finer Meats and Seafoods in February 2008. Under the agreement, Michael and John Bloch remain with the company as chief executive officer and president, respectively. Michael’s intends to pursue strategic growth initiatives while continuing to provide superior customer service going forward.
Michael’s and Sorenson benefited from the company's ability to create a fully integrated solution, including merger and acquisition advisory services and acquisition financing. Providing a broader range of merger and acquisition capabilities was one of the primary reasons CIT acquired Edgeview Partners in 2007.
The knowledge and experience of teams from both organizations enabled the transaction to go smoothly, despite challenging market conditions. The deal moved quickly from the signing of a letter of intent to closing in approximately 45 days.
