Monogram Foods, a Memphis, Tennessee-based food products manufacturer, will revisit acquisitions next year after a two year hiatus, said co-founder and CEO Karl Schledwitz.
Ideal targets are private label and co-packing food and beverage companies, the executive said. Monogram is particularly interested in the frozen appetizer and snacking space and would look at targets with between USD 25m and USD 250m in revenue, he added.
Monogram is holding “exploratory talks” with a couple of targets and reached a deal to acquire a business with over USD 100m in revenue next October, Schledwitz said. The deal hasn’t been announced.
While it will pursue some buys next year, he said it will have a larger budget for acquisitions in 2021, after it expects to have completed a dividend recap. Monogram is not using an adviser for the process, to take place next year, and Schledwitz declined to discuss the size.
The executive said Monogram Foods is frequently sent books and invited to auctions, but prefers finding targets through its personal network to avoid competition with private equity firms. The company does not typically use a buyside advisor, but is open to receiving leads from investment banks, he said.
Monogram Foods, which Schledwitz founded with President Wes Jackson in 2004, is projecting around USD 775m in revenue this year, the CEO said. It is on track to grow its sales to USD 900m in 2020 and plans to reach USD 1.5bn within five years. The company has 3,000 full-time employees at eight manufacturing plants.
Acquisitions have been a large part of Monogram’s growth story since the beginning, according to Schledwitz. The company even closed a deal during its first year in business. To date, it has made eight acquisitions, most recently through its purchase of Massachusetts-based appetizer manufacturer Progressive Gourmet in 2016.
Following the deal with Progressive, Monogram put the pause button on acquisitions to focus on organic growth initiatives. Over the past two years, Schledwitz said the company has invested heavily in technology and hired five key executives, including a CFO and Chief Supply Chain Officer.
Since inception, Monogram Foods has raised about USD 100m in capital from more than 100 investors, both individuals and family office Pittco Capital Partners, Schledwitz said. He noted that the company’s ownership is widely dispersed, with no shareholder owning above 15%.
Monogram Foods manufactures hundreds of products, including beef jerky, corn dogs, frozen appetizers and baked goods. Schledwitz said 85% of the company’s sales are derived from private labeling and co-packing, with the remainder coming from its regional and licensed brands. It has over 100 private label customers.
Although strategic buyers and private equity firms frequently approach Monogram to discuss a sale, Schledwitz said he has no intention to give up equity in the near term.
Legal and accounting services for the company are provided by Baker Donelson and CBIZ, respectively. BMO Harris acts as its commercial bank.