“The market is back” for beverage company investment, according to a report from the Sherborn, MA-based investment bank, citing deals in beverage and other natural products that include recent investments in Aquahydrate, Mix1, O.N.E. and Activate.
“As the stock market has rebounded and the economy continues to improve, we are seeing increased interest in deals from strategics, venture funds, fundless sponsors and angel investors,” said Mike Burgmaier, a managing director with Silverwood. “Several new funds have formed and institutional investors that stood on the sidelines over the last few years are seeking to deploy capital. We expect these trends to continue throughout 2011.”
Other observations from the report: while ‘deal flow’ — the number of investments that investors are seeing — is back to pre-recession levels, valuations are still down, and that deals in the past year seemed to include a set of downturn “winners and losers,” with unprofitable brands forced to sell after searching for financing, while winners were more easily able to find cash to accelerate growth.
“Many companies with stalled growth, low gross margins or extended losses have found difficult capital markets at company-expected valuations,” Burgmaier said. “In these circumstances, the best remaining options are to sell at a pragmatic price, find a merger partner or shut down. However, access to capital has significantly eased for companies that enjoy a market-leading position or strong growth with good margins and profitability — or at least a plausible path to profitability.”
Silverwood’s Consumer Products Team, headed by Jonathan Hodson-Walker, Burgmaier and Nicholas McCoy, has been gearing up — it’s added a total of seven industry advisers, most recently signing up juice and dairy business veteran Brad Barnhorn to join a team that includes former PBG exec Michael Hartman and natural products guru Bob Burke and former Whole Foods heavy Tim Sperry. All are expected to be on hand at Expo West in Anaheim.