Deal of the Month
AUA Equity seek to achieve superior, risk-adjusted returns by harnessing their private equity and operating expertise to support lower middle-market enterprises in realising their fullest potential.
AUA Private Equity Partners believes that active sponsorship and fully aligned partnerships reflect our firm’s long-term and strategic outlook for growing companies and unlocking value. AUA Equity is a minority-owned, operationallyfocused, private equity firm that makes control and significant minority equity investments in companies in the consumer, media, and business services sectors. In addition, they target Hispanic-oriented companies and family-owned businesses located in the United States. They define the Hispanic-oriented market as companies that are Hispanic-owned, currently target or could benefit from targeting the Hispanic consumer, or predominately employ Hispanics.
The team at AUA Equity brings together different disciplines and perspectives in analysing each investment opportunity. The firm is led by Managing Partner Andy Unanue, former Chief Operating Officer of Goya Foods, Inc., the largest and most successful Hispanic-owned food company in the United States (founded by the Unanue family) and this experience is something the firm leverages.
They also draw on the strength of their operating executive board to provide additional industry insights, guidance, and operational and strategic direction. The team has significant experience managing companies’ post-investment as private equity investors and operators and is thus able to better assist smaller companies in executing their business plans. In an interview with firm’s Steven Flyer, he lifts the lid on the Equity/Raymundos Food Group transaction, how to stand out from the competition, the role of staff in the success of the business and the challenges the firm faces in 2016 and beyond.
The AUA Equity/Raymundos Food Group transaction
Raymundos Food Group was identified through a combination of research and meeting the company face to face at a food show in the Unites States Flyer reveals. Raymundos Food Group produces flans, puddings, gelatines and other refrigerated desserts and snacks which are value-orientated products sold to Walmart and other value supermarket chains, and it also has a Hispanic orientation.
Part of AUA Equity’s strategy is to develop transactions outside of the formal auction process so they carry out much groundwork and grass route sourcing actions. They met the company at a trade show and spent time with the owner of the business which led to a transaction, so a lot of “research and relationship-building” is what led up to the deal.
Flyer goes on to explain that, “we saw a business that was similar to our targeted strategy, it was a family-owned business and it was targeting the Latino community”. In terms of manufacturing, “we felt that it had an interesting niche because other gelatine brands such as Gelo were declining in sales” but the category targeted at the Hispanic market was growing. “This gave us the opportunity to build a family-owned business and build up systems, operations, a sales force for marketing and branding to help build the business” he continues. They have also added a new CEO and CFO, a sales team, as well as redeveloping the website and they have built the brokerage network and “we continue to adds value to the company” Flyer stresses.
Challenges during the completion of the deal
Working with family businesses it is apparent that they are very smart business owners and entrepreneurs, but perhaps they are not the most sophisticated in regards to systems. They may be lacking in audit financials, a built out infrastructure or they may not have the most extensive accounting systems, “so much of what AUA Equity had to do was to piecemeal a lot of the sales and financial materials together and we saw opportunities to implement better systems and functions” Flyer explains and says that acquiring Raymundos Food Group was an opportunity as well as a challenge.
On the impact the transaction is having today, is twofold Flyer explains. Firstly, AUA Equity continues to grow the brand and market awareness, indeed some of their products sell very well in US supermarkets. Secondly, because AUA Equity closed the transaction and people heard about it they were successfully able to acquire Noga Dairies recently, who produce drinkable and fridge yoghurts and smoothies. This acquisition gives AUA Equity the opportunity to “expand the Raymundos Food Group from what was traditionally refrigerated desserts into a business that now offer natural and healthier products” and thus creates a platform for further growth.
Better packaging and marketing help AUA Equity to stand out from the competition Flyer underlines as well as creating a brand awareness and he stresses they have a very good quality product in terms of taste, value and price and he said they need to continue innovating in terms of providing new flavours and products. Concerning the future of the industry AUA Equity is a part of is that “consumers are looking for cleaner labels and more natural products and less artificial flavourings”. Also, “continuing to innovate and develop new products that excite the customer” and prompt them to buy their existing favourite flavour and try some new ones.
“Meeting the demands of customers in terms of flavour and profiles as well as consumer demands on the “more natural and healthier side, which is one of the reasons we decided to acquire Noga Dairies. The Raymundos Food Group transaction “exemplifies our strategy and the success we will have in that category” Flyer concludes.
Private Equity Partners, LLC
Name: Steven Flyer
Address: 666 Fifth Avenue,
27th Floor New York, NY 10103
Phone: 001 (212) 231-8600