Milk Specialties Global – Michael Fisch (American Securities), (S3.EP.03)
Oct 4, 2023
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Michael Fisch, founder and CEO of American Securities, a private equity firm, discusses their investment in Milk Specialties Global, the potential growth opportunities in the whey protein market, and the company's transition from a commodity supplier to a consumer product company. They also highlight the importance of diligence in their investment approach and achieving stability through shared vision and communication with management teams.
American Securities focuses on acquiring market-leading companies in specific niches to drive growth opportunities.
The successful exit process of Milk Specialties exemplified American Securities' partnership approach and emphasis on long-term success.
Deep dives
Overview of Private Equity Deals in the Middle Market
Private Equity Deals focuses on the middle market, which constitutes around 200,000 businesses in the US with revenues between $25 million and $1 billion. These businesses employ 50 million people and represent two-thirds of total US private equity deal value. Season 3 of the podcast aims to provide a glimpse into the middle market with a few select examples.
Introduction to Milk Specialties Global
In Episode 3 of Season 3, Michael Fish, the founder and CEO of American Securities, discusses Milk Specialties Global. American Securities manages $20 billion and focuses on US middle market companies. Milk Specialties, a producer of dairy products for the health and wellness industry, focuses on value-added ingredients for recognizable brands like Quest Nutrition and Premier Protein. Fish highlights their approach to investing, market niche, and diligence and deal process.
Investment Approach and Growth Strategies
American Securities' investment style centers around acquiring market-leading companies in specific niches. With a sweet spot of $100 to $150 million in existing EBITDA, they primarily invest in established industrial, consumer services, and healthcare services companies. In the case of Milk Specialties, they focused on growth opportunities, including expanding international markets, diversifying product formats, and securing co-manufacturing partnerships. Their proprietary sourcing network and strategies to mitigate cyclicality and commodity exposure were key to their success.
Exit Strategy and Lessons Learned
After a successful ownership period, American Securities decided to exit Milk Specialties. They employed a traditional exit process, utilizing an investment banker and engaging with potential buyers. Ultimately, they found a financially advantageous deal with a buyer who brought synergies and growth opportunities. American Securities exhibited flexibility by offering to stay invested, giving the buyer the option to take over or fund the equity commitment. The deal was signed in December 2022 and closed in February 2023. Overall, the investment in Milk Specialties exemplified their partnership approach, emphasis on value creation, and focus on long-term success.
Michael Fisch is the founder and CEO of American Securities, a private equity firm founded in 1994 that manages $27 billion focusing on U.S. middle market companies.
Milk Specialties is a producer of dairy products for the health and wellness, sports, and functional food industries. With roots dating back to 1944, the company focuses on Whey products and ingredients that end up in recognizable brands.
Our conversation covers American Securities approach to investing, Milk Specialties market niche, and the diligence and deal process. We turn to the gameplan for the business alongside existing management, growth drivers, and risk mitigation. We then go full circle discussing the sale process to exit the investment, covering the timing, auction, and case against continuation funds.