As produce industry participants prepare to showcase their latest innovations and newest products at the PMA Fresh Summit in Orlando this week, several concerns remain top-of-mind including food safety issues and ongoing trade disputes with China. Meanwhile, industry participants are turning to M&A to strengthen their market position or rationalize business units and product lines.
SDR’s Fall 2018 Produce Report explores these trends and includes a performance analysis of produce-related public companies and a data-driven analysis of private and public company M&A transactions, deal multiples and private placement activity over the past several years.
The full report is available for download below.
Produce Report Preview
While the level of M&A activity may have slowed from earlier in the year, we believe the level of interest has not waned, as industry participants try to jockey their competitive positioning and aim to fill gaps in product lines, secure supply and access new markets.
Furthermore, private equity groups (PEGs) that have developed an “investment thesis” around healthy eating trends continue to have strong interest in acquiring well-run businesses in both the produce industry and the broader fresh food industry. Typically, PEGs are looking for businesses with solid growth prospects, a strong management team and decent EBITDA margins. While there can always be buyers for almost any business at the right price, high multiples continue to be paid by both strategic companies and PEGs when the business is marketed through a competitive process.
With the NAFTA negotiations now completed, the industry can begin to remove one important variable creating uncertainty in the M&A marketplace, assuming the new USMCA is ratified by each of the three countries’ governments. On balance the industry seems satisfied with the terms reached. According to spokespeople from the Produce Coalition for NAFTA, the CPMA and other industry pundits, the USMCA doesn’t change much for fresh produce marketers. The controversial seasonal anti-dumping provision was not included as some industry participants, such as the Florida Fruit and Vegetable Association, had pushed for.
However, as outlined in our summer report, the trade issues with China…