CanMar Foods Ltd was an established food processor with best-in-class facilities in grain processing when HCI came across the business. Solid production management and systems were in place, with ample plant growth capacity. Sales were modest and the founders were nearing retirement and looking to exit. A succession plan was needed.
The founders were good at production, but the business needed experienced market leadership. Growth was necessary for the business to capitalize on its existing production infrastructure. Product branding had not yet evolved enough to attract significant interest from large competitors.
The Financial Transaction
A straight-forward share purchase agreement was negotiated equivalent to a 7x multiple of the existing normalized revenue, roughly equivalent to the market value of the tangible assets. While goodwill resulted on the books given the structure of the transaction, from a practical standpoint none was paid.
The Deal Drivers
- We were able to find the “right” operating partner, one who was willing to make the financial bet alongside HCI. Their marketing and management experience in the food industry was persuasive and their ethical DNA matched HCI’s.
- We were reassured that the production team would remain loyal and committed to the business under new ownership.
- There were synergies to HCI’s existing farming operations and a farm-to-table story that could be shared.
Since the acquisition in December 2017, CanMar Foods has achieved National Distribution of the CanMar Roasted Flax Brand across Canada and has become the largest producer of Food Grade Flax in Canada.
CanMar’s Roasted Flax sales now represent one in every three dollars spent on Branded Flax in Canada. The company is currently working on expansion plans into the USA market.