Deal decisions
A peek inside the Eagle Foods conference room
At Eagle Foods, the decision hierarchy starts with Paul Smucker Wagstaff and Jeff Boyle. They review opportunities though a list of 15-20 criteria, which breaks out the size of the organization and the category, its share of that business and its growth trend. They also look at the complexity of the business — is it a high-or low-SKU environment? And they look at the level of competition, preferring a higher barrier of entry.
If a company meets enough of those criteria, it gets through the first stage and moves on to be considered by the leadership team.
“Our leadership team would consist of the functional heads,” Wagstaff says. “We’d have a head of finance, we’d have a head of marketing, head of sales, head of operations, head of HR. We’d bring that team together and say, ‘Here’s the opportunity in front of us. Here’s the criteria it met. Here’s the criteria it didn’t meet,’ and then we’d get a sense from the team — literally we walk around and say, ‘Is everyone comfortable going forward?’ And if we get a majority of people comfortable — we like (it to be) unanimous, but if it’s not unanimous, that’s OK — then we take it to the next step, and that is really to meet with Kelso (and Co.), our private equity firm, and give a recommendation of why we think this is an acquisition we really want to run hard for.”
Wagstaff and Boyle want to walk through the buildings of the companies they’re considering for acquisition to see their operations. They also want to understand the people, know who they are, what type of fit they provide and what type of expertise they have.
Boyle says it’s preferential to bring on people through the merger because they have unique, intimate knowledge of the product or brand that is very valuable in the integration, and helps Eagle Foods speed up integration. But with their company’s internal expertise, Wagstaff says adding existing expertise from the integrated company isn’t necessary.
“We will look for an opportunity and if it has the right people and everything else fits, that’s a bonus,” Wagstaff says. “If it doesn’t and it meets all the other criteria, we have the ability to bring it in-house without the human capital. We would much rather have human capital come along, or at least some, but it’s not a must for us.”
