By Marlene Givant Star and Soma Biswas
Private equity guys (and ladies) got their start buying and selling big consumer names: think KKR's (NYSE:KKR) takeover of RJR Nabisco in the 1980s.
The industry has grown up since then, funding everything from Skype to Chrysler. But its love affair with the consumer sector endures. A case in point is Brynwood Partners.
The Greenwich, Connecticut-based middle-market private equity firm is shifting its strategy to consumer products from industrial companies, says Ian MacTaggart, managing partner.
MacTaggart says the firm will only do a transaction if it can bring operational enhancement to the table. Five of its seven managing partners have significant operating experience at consumer product companies and the firm’s successes have tended to be in the consumer sector, he says.
For example, Hendrik “Henk” Hartong III was formerly president and CEO of LincolnSnacks, the company that makes Fiddle Faddle and Poppycock brands. Brynwood sold that business to another private equity firm, Willis Stein, in 2004. Willis Stein subsequently sold the business to ConAgra (NYSE:CAG), which still owns it.
Another Brynwood managing partner, Dario Margve, was president and CEO of J.B. Williams, owner of Brylcreem, Aqua Velva, Cepacol personal care products. Brynwood sold the business to Combe Inc. in 2002.
"We're very involved with our businesses and have relationships in the trade." Through those relationships, Brynwood naturally "evolved to more consumer deals," he says.
The company still owns a few industrial companies – G&T Conveyors, IGS Global and S. Walter Packaging-- but its most recent investments have been in the food and personal care segments, MacTaggart says. The firm is also actively looking at other segments, such as frozen foods and private label businesses, where it has done well in the past. For instance, it exited Richelieu Foods, a maker of private label frozen pizza and salad dressings, in 2010, selling the company to PE firm Centerview Partners.
Brynwood has a penchant for sprucing up languishing brands, so they can be resold to strategic buyers. It sold Stella D’Oro cookies — after a contentious and highly publicized battle with unions — to listed snack food maker Lance Inc., in 2009. Stella D’Oro had been a castoff brand Brynwood had bought from Kraft (NYSE:KRFT) three years earlier.