What’s Behind All The M&A Deals In E&S

The brokers and investment bankers that help equipment and supplies companies buy and sell other companies had a very busy 2012. Foodservice Equipment Reports and our forecasting partner John Muldowney, v.p.-marketing at Alto-Shaam, counted 22 transactions completed or announced during the year, more than double the 10 recorded in ’11.

A number of factors drove the dramatic increase in M&A activity last year. A major impetus was the anticipated increase in the capital gains tax at the federal level. Capital gains taxes did indeed rise from 15% to 20% in the American Taxpayer Relief Act.  But many looking to sell were concerned such gains could be treated as regular income, pushing the tax rate to close to 40%.

Business life-cycle factors continue to be an issue in foodservice E&S. Many companies are into their third generation and the dispersion of ownership often becomes a problem.  The Great Recession limited the ability to sell as business values plummeted. Last year, the market finally recovered somewhat. Not least, record low-interest rates helped grease many of the wheels.

Our recap of notable transactions follows. Most of the deals are outright acquisitions, but some are mergers. In the latter case, we list the two companies in alphabetical order.

E&S Manufacturer Transactions 2012

Buyer                                      Acquired

Component Hardware              JHL Enterprises

Dispensing Dynamics                Colman Group/San Jamar

Vollrath Co.                              Polarware/Stoelting

Standex Foodservice                Giorik SpA (minority share)

Cooper Atkins                          Docutemp Wireless

Ali Group                                  Scotsman Industries

Middleby Corp.                         Nieco Corp.

Candle Lamp                           Sterno Group

Plymold/Foldcraft                    Waymar/J.H. Carr

Diversified Foodservice            Franklin Machine Products

Vollrath Co.                             Acryfab Inc.

Unified Brands                         Power Soak Systems

Middleby Corp.                        Viking Range

E&S Distributor/Dealer Transactions 2012

Buyer                                      Acquired

Tundra Specialties                     Superior Commercial Kitchens

Direct South                             Citisco Food Service Equip.

H. Weiss Co.                            BRC Commercial Kitchens

Premium Supply                       Tassone Equipment

TriMark USA                             Century Concepts

TriMark USA                             Federighi Design

Mission Restaurant Supply        Metroplex Restaurant  Equip.

Chefs’ Toys                              Star Restaurant E&S

Kittredge Equipment                 Northeast Food Service E&S