Dessert Holdings acquisition signals fresh start for bakery-to-go and eat-in

By Gill Hyslop contact

- Last updated on GMT

Bain is reportedly betting $1bn on high-end desserts. Pic: GettyImages/CircleCreativeStudio
Bain is reportedly betting $1bn on high-end desserts. Pic: GettyImages/CircleCreativeStudio

Related tags: Dessert Holdings, The Original Cakerie, Lawler's Desserts, Atlanta Cheesecake Company, Bain Capital Private Equity, Gryphon Investors, Mergers and acquisitions

The North American producer of chef-inspired cakes and desserts for the retail and foodservice sectors has been acquired by private equity firm Bain Capital Private Equity for an undisclosed amount.

The deal – pegged at $1bn by DealBook – is indicative that prospects for the bakery-to-go and eat-in space are starting to look rosy again.

St. Paul, Minnesota-based Dessert Holdings is an umbrella organisation of three premium dessert companies that service more than 250 customers in the foodservice and retail channels in the US, Canada, Mexico, the Caribbean, South America and Asia.

The Original Cakerie, founded in 1979, is a manufacturer of high-quality desserts with locations in British Columbia and Ontario. Texas-based Lawler’s Desserts was founded in 1976 and produces gourmet cheesecakes, layer cakes, pies and other premium desserts, while Atlanta Cheesecake Company, founded in 1988, is a leading manufacturer of cheesecakes and fusion desserts based in Georgia.

The right time

Bain, too, is no stranger to foodservice. The firm’s restaurant, foodservice and grocery-related investments have included Dunkin’ Brands Group, Brakes Group Food Distribution, Domino’s Pizza and Burger King, among others.

“Bain Capital Private Equity’s investment and business-building expertise is coming at just the right time in our evolution, and they share our vision and ambition to accelerate our growth as the innovation leader in premium, artisanal desserts,”​ said Paul Lapadat, CEO of Dessert Holdings, who will retain his position on completion of the deal. Dessert Holdings’ executive team will also remain in place.

Adam Nebesar, MD at Bain Capital Private Equity, added, “Paul and his team have done an exceptional job in building Dessert Holdings as the leading premium desserts platform in a category that continues to grow as consumers increasingly choose to treat themselves to desserts with high quality, clean label ingredients.

“We are thrilled to partner with this experienced team and look forward to supporting Dessert Holdings as it develops new and innovative products, pursues organic growth and acquisition opportunities, and further strengthens its value proposition to existing and new customers.”

Well-positioned

Bain acquired Dessert Holdings from Gryphon Investors, which has, over the past five years of ownership, supported two add-on acquisitions, overseen a sizeable plant expansion and solidified the management and operations team.

“We are proud to leave Dessert Holdings well-positioned to thrive in a burgeoning market sector with strong growth trends, and we wish Paul and the entire team continued success,”​ said Keith Stimson and Matt Farron, both partners at Gryphon. 

According to New York financial consultancy firm Duff & Phelps, the deal is sure to set the stage for others to follow as eateries reopen and diners are lured back out. Renewed buyer interest in the space will certainly be welcome for sellers. Duff & Phelps data shows that recent valuations for bakery deals were subpar, registered at 10.3x 12mn EBITDA in 2020, lower than an 11.1x 5-year median value.

The transaction is expected to close during the second quarter of 2021 and is subject to customary closing conditions. Debt financing for the transaction is being led by Antares Capital.

Houlihan Lokey served as financial advisor to Dessert Holdings. PwC served as accounting advisor, and Ropes & Gray LLP as legal counsel to Bain Capital Private Equity.

Related news

comments

Post your comment

We will not publish your email address on the website

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Follow us

Products

View more

Webinars