Nash Advisory was engaged in February 2023 to assist the owners of Crackerjack in dealing with in-bound approaches.
Crackerjack Foods was founded in 2015 and had grown to become a leading food service brand in frozen potato snacks. Crackerjack is the market leader in potato cakes and operates out of two highly automated, Melbourne based manufacturing facilities.
Hear from Paul Nemets on identifying an attractive food business
Coming out of COVID, the food service and hospitality markets were booming and demand from Crackerjack’s end customers (fish and chip shops and canteens) was strong.
Off the back of increased market penetration, in early 2023 the owners of Crackerjack received a number of unsolicited approaches from trade players looking to acquire the Crackerjack business.
Whilst Crackerjack’s accounting and financial data was sufficient for the private management of the business, Nash determined that a more rigorous set of financial data would be required to facilitate a due diligence process with a large corporate bidder.
Crackerjack was sold to Lamb Weston.
Afteran initial strategic assessment, we determined the most effective sale process would be targeted at a small number of key players in the potato sector. The customer, ingredient and marketing synergies available to large corporate buyers would allow them to bid substantially higher than other parties that were not involved in the potato market. By limiting the breadth of the process, we were able to focus our attention and resources on the most likely acquirers. Lamb Weston (NYSE:LW), a multinational, vertically integrated potato products company acquired Crackerjack in September 2023. The process duration was 7 months start to finish.
Whilst Crackerjack’s accounting and financial data was sufficient for the private management of the business, Nash determined that a more rigorous set of financial data would be required to facilitate a due diligence process with a large corporate bidder. As part of our engagement, Nash rebuilt the historical financials bottom up, by SKU, using invoice level sales data and product BOMs. The upgraded financial model was able to show a true accrual-based profit and loss at a granular level.
At the point Nash was engaged in February, food and commodity markets were experiencing unprecedented price increases. Inflation in the potato market was more pronounced due to weather events reducing supply of Australian based produce. Crackerjack was able to substantially increase the price of its products, over and above the input cost inflation. By having a dynamic, bottom-up model, we were able to forecast numerous scenarios of how wholesale price, input cost and sale volumes would interact in FY23 and FY24. The ability to assess these scenarios provided comfort and confidence to the acquirer.
Purchase price was not the only motivation behind choosing Lamb Weston as the ultimate acquirer of Crackerjack. The Crackerjack and Lamb Weston teams had a great relationship prior to starting the sale process. It became clear that Lamb Weston was the best party to maintain the Crackerjack legacy and take the business forward into a new era of growth. The due diligence process went smoothly and both sides of the transaction worked collaboratively throughout the deal.
Nash Advisory was engaged by Crackerjack to conduct a divestment.
Nash Advisory utilised network within the food service industry to begin soft soundings and test market interest.
Nash Advisory rebuilt Crackerjack’s historical financials on a bottom up, per SKU basis, using invoice level sales data and product BOMs. Nash Advisory then conducted a four-year forecast on the same basis.
Information Memorandum shared with interested parties.
Lamb Weston granted exclusive due diligence.
Extensive financial, tax, legal, commercial and HR diligence in the Data Room.
With slight changes in structuring, Lamb Weston confirms their initial offer and the businesses begin negotiating final sale documentation. Nash Advisory work closely with Crackerjack’s legal advisor, HWL Ebsworth.
Transaction documentation signed.
When it comes to selling your business, Nash Advisory offers a highly detailed and extremely thorough process that produces the best possible results.