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.”
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.