Trivest Partners LP portfolio company Miami Beef recently completed a pair of add-ons. To find out more about the Gables, Florida-based private equity firm’s add-on strategy for growing Miami Beef, affiliate title PE Hub spoke with Jamie Elias, managing partner, and Jonathan Schonfeld, vice-president.
“We studied the market and asked ourselves, ‘What is preventing us from taking less than a 51 percent equity stake even though 99 percent of PE insists on taking a controlling stake?,'” recalled Elias, who leads the firm’s non-control investment strategies through the Trivest Growth Investment Fund. “Since we had exclusively done these founder-and-family-owned businesses for so long, we knew that while people say if you give someone a pot of money they’re not motivated to keep working, it’s just not true.”
Trivest made a non-control investment in Miami Beef – a food distributor based in, you guessed it, Miami – in 2022, and the distributor has been in hyper-growth mode ever since. Specializing in family-and-founder-owned businesses, Trivest saw a strong distribution channel and an opportunity to help Miami Beef fatten up its business.
Part of that scaling is the two recent acquisitions: New York-based Brooklyn Burger, which distributes frozen burgers throughout the US in retail locations and grocery stores with a concentration in the Northeast. The company’s products include burgers made with Wagyu, premium blends and natural angus. Devault, Pennsylvania-based Devault Foods is a foodservice supplier of fresh burgers, meatballs and other beef and meat products throughout the Northeast and Midwest.
“The plan for both of these acquisitions is to ramp up growth, increase marketing spend and give them access to resources that some family-owned businesses in this space just don’t have,” said Schonfeld.
One example is access to the CEO network of other family-and-founder-owned businesses in Trivest’s portfolio.
“Our strategy to grow these businesses is to focus on organic growth through performance management tools we bring to the table while finding and executing the right add-on acquisitions,” Schonfeld said. “We believe the companies that implement Trivest’s value creation plan consistently command premiums at exit.”
The aggressive add-on strategy comes at a time when supermarket shelves are filled with everything-but-meat alternatives. Recent years have seen a surge in popularity of beef burger alternatives like the plant-based Impossible Burger, and other alternatives that use mushrooms or tofu in place of beef.
Schonfeld argued that the trend is waning.
“While there was a lot of talk about meat alternatives in recent years, there’s recently been a reversion of that trend,” Schonfeld said. “We’re seeing continued growth in consumers opting for premium beef products on a consistent basis.“
Instead, Schonfeld highlights, consumers are opting into more high-quality proteins vs. traditional beef products that may contain soy or other additives. Think supermarket frozen beef patties of the past that had more than just “beef’ listed in their ingredient make-up.
“Miami Beef, Brooklyn Burger and Devault Foods all focus on high quality, better-for-you beef products,” Schonfeld said. Consumers still want meat, but are perhaps better educated now than in years past and aren’t interested in settling for lesser quality.
Interestingly, there is room for opportunity in an industry one would assume was already saturated in beef-country USA. “Some people may think there are only four or five big players in the beef industry,” said Schonfeld. “However, when you start to go down into the regional markets, there are hundreds of family-and-founder-owned businesses out there. This is an incredibly fragmented industry comprised of numerous founder-and-family-owned business. We’re going to be assertive with our add-on strategy.”