By Steve Gelsi for PE HUB, 12/14/2015
• Falconhead Capital acquires fountain beverage specialist
• Company was owned by CMS Private Equity
• PE firm eyes consolidation deals
Falconhead Capital plans to complete add-on deals in 2016 for its newly acquired Multi-Flow Industries LLC platform to broaden its reach in the U.S. soft drink business, said Chief Executive Officer David Moross.
Falconhead Capital paid CMS Private Equity an undisclosed sum for a 70 percent stake in Multi-Flow, the firm announced Monday. CMS invested in Multi-Flow in 2008.
“It’s a big industry and it’s prime for consolidation,” Moross said in a phone call. “We’re in talks now [with acquisition targets].”
Moross said Falconhead Capital sees potential geographic expansion ahead for Multi-Flow, particularly in the Midwest and Western United States.
Organic growth for the company is also expected from new institutional customers such as schools, nursing homes, prisons and hospitals.
Founded in 1937 in Philadelphia, Multi-Flow operates 14 warehouses along the East Coast from its headquarters in Huntington Valley, Pennsylvania. It reaches the remainder of the country through 90 independent distributors.
Its products include soda, juice, lemonade, tea, nutrient water, energy drinks and coffee. Brands include Kodiak Cola, Citrus Splash and Morning Dew.
Company management led by Ken Schnarrs, as well as members of the family of company founder Sam Gottlieb, took part in the deal.
Falconhead Capital doesn’t operate a traditional private equity fund. Instead, its draws committed capital from LPs for specific deals, while investing its own capital. The firm typically writes equity checks of $20 million up to $100 million per deal. Moross said companies of this size offer greater growth prospects than larger targets.