September 29, 2016

Food Company Valuations and Multiples


In order to address the several factors that go into company financial valuations and specifically valuations of recently transacted food and consumer product companies, I have compiled a list of 10 recent mergers and acquisitions in the food business.


Food company valuations can be more of an art than science. This process can take weeks to compile the proper data and insight to get to sound selling price. My experience in this area helping companies sell for millions will often start with a basic look at a multiple of revenue.


I’ve pulled 10 recent acquisition transactions and computed their multiple to revenue selling price. The range is roughly 1x to 4x annual revenue. There are many factors that play out in setting a multiple and a rough shorthand for a business might be 1.8x for you to consider your company business valuation before digging into the basics of value.

Below is the list of 10 recent mergers and acquisitions in the food business with their selling price, most recent yearly revenues of the acquired companies, and their multiple of annual revenue to selling price.



Mergers & Acquisitions
Selling Price
Approx. Annual Revenue of Acquired Companies
Multiple of Annual Revenue to Selling Price
1
JBS USA Holdings acquired Cargill
$1.45 billion
$368 million
3.94
2
Post Holdings acquired MOM Brands
$1.15 billion
$750 million
1.53
3
Hormel Foods acquired Applegate Farms
$775 million
$340 million
2.28
4
General Mills acquired Annie’s
$820 million
$204 million
4.02
5
Snyders Acquired Diamond Foods
$1.27 billion
$864.2 million
1.47
6
Hain Celestial acquired Rudi’s Organic Bakery
$61.3 million
$60 million
1.02
7
Flower Foods acquired Dave's Killer Bread
$275 million
$100 million
2.75
8
Campbell's Soup acquired Garden Fresh Gourmet
$231 million
$100 million
2.31
9
WhiteWave Acquired So Delicious
$195 million
$115 million
1.70
10
TreeHouse Foods acquired Flagstone Foods
$860 million
$697 million
1.23

From the above information regarding the recent mergers and acquisitions in the food business, particularly the multiple of food company revenue to selling price, I have noted several remarks. First of all, there has been a remarkable trend of mergers and acquisitions in the food industry over the last few years. Companies in the food business have been looking for diversification and synthesis opportunities by merging with other food companies of the same or different market specializations.


Depending on the purposes of each merger or acquisition as well as the characterization of the acquiring and acquired companies, the multiple of annual revenue to selling price for each transaction may vary approximately from 1 to 4. Furthermore, from my analysis while compiling the above information, the acquirers in these above transactions have been receiving varying responses from the financial market. Also, it is interesting to note in some cases, their share prices increase, while in other cases, their share prices drop in the aftermath of the merger or acquisition announcement.


If you have a question or desire more information on improving or reviewing your food company valuation send a note. tim@timforrest.com  

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