Intermediary Bob Wolter specializes in the Cheese and Dairy Industry.
Description of the Cheese and Dairy Industry
- There are 10,860 licensed Wisconsin dairy farms and 1,271,000 Wisconsin dairy cows.
- Wisconsin cows produce 13.7% of the U.S. total while 25.5% of the U.S. total cheese production happens in Wisconsin!
- Wisconsin has led the U.S. in cheese production since 1910!
The state is the epicenter of cheese making in the U.S. and we owe it to the early Swiss, Dutch and German settlers that came into this area back in the mid 19th century. Today, Wisconsin cheesemakers are experiencing a Renaissance with Artisan and Specialty cheeses due to their creativity, experimentation and expertise.
Back in the year 2000, Artisan and Specialty cheese sales represented less than 10% of Wisconsin’s cheese production. Fast forward to 2014, and sales represented nearly 25% of Wisconsin’s total production.
Wisconsin’s cheese industry has the best infrastructure in the country. With the help of Babcock Hall at the University of Wisconsin Madison, the Center for Dairy Research is on the cutting edge of science and research – always expanding the boundaries of knowledge of dairy uses and products. On a regular basis, Wisconsin wins 35 to 40% of the awards at annual National Cheese Contests.
The average Wisconsin dairy cow generates more than $21,000 a year in economic activity.
“I love the industry, the people, and the cheese.”
– Bob Wolter, Mergers & Acquisitions Advisor
When I began with CBS Global in 2008, I was advised to develop a niche, learn it, join the industry organizations, get to know key influential individuals within the industry and network with them in a mutually beneficial business relationship.
I chose the Cheese and Dairy Industry, which happens to represent 25% of Wisconsin’s GDP…Who knew! I got to work developing a database of cheese and related companies and started marketing our services at CBS Global.
We met Dan Carter, who was a lifelong owner and operator of a large cheese cooperative called Dan Carter Inc. or DCI. He was appointed by then, Senator Kohl to head up the Dairy Business Innovation Center as its Director with the focus on assisting companies and individuals expand their businesses, create new businesses and opportunities through creative financing, grants, unique partnerships expanding and improving the Dairy Industry.
He became our mentor, advisor and consultant and helped introduce CBS Global to his circles in the industry and at the Department of Agriculture. From there we met Rich Scheuerman, who was the former CEO of Alto Dairy, a large cheese manufacturing cooperative. He is currently a consultant to cheese and cheese related companies and is a consultant with CBS Global as well.
Wisconsin’s Cheesemakers are experiencing a renaissance with Specialty and Artisan Cheeses and the reason is the creativity, experimentation and expertise of the Cheesemakers. Wisconsin is the epicenter of cheese making in this country and we owe it to the early Swiss, Dutch and German settlers that came into this area back in the mid 19th century. Wisconsin’s Cheese industry has the best infrastructure in the country. With the help of Babcock Hall at the University of Wisconsin Madison, the Center for Dairy Research is on the cutting edge of science and research, always expanding the boundaries of knowledge of dairy uses and products.
Back in the year 2000, Artisan and Specialty Cheese sales represented less than 10% of Wisconsin’s production. Fast forward to 2014 and sales represented nearly 25% of Wisconsin’s total production. Wisconsin on average wins 35 to 40 percent of the awards at the National Cheese Contests on a regular basis and I have had the pleasure of meeting and befriending two women who won the National and World Cheese contests respectively. Katie Hedrich of LaClare Farms won the US Cheese contest in 2011 at 25 years old!! Marieke Penterman of Holland’s Family Farms won the World Cheese Championship with her aged Gouda in 2013.
In January of 2016 Michael Schwantes and I were invited to a Trade Mission in Cuba. One of the industries Cuba is interested in is dairy and it’s food products. We invited the Executives of Foremost Farms, Inc. and Winona Foods to join us. It is our goal to be the conduit for exporting dairy products to Cuba and Latin America.
Arla Cheese Plant in Muskegon, MI
One day I received a call from a gentleman that had an eastern European accent and he was inquiring on a couple of cheese companies I had listed for sale. He mentioned he was looking for a shuttered cheese plant that was at least 30,000 square feet and had all the equipment in place. I informed him the cheese plants I had for sale were on going businesses and the business was included in the real estate.
We continued our dialogue and he asked me if I would do a nationwide search for a closed cheese plant that fit his parameters. We spoke almost daily and I did many searches, but typically the equipment is auctioned off fairly quickly after closing the plants. We were going to have to find something in the process of closing or just closed.
I was doing a lot of leg work for someone I hardly knew and when I pressed him who he was and what his background and qualifications were, he was rather vague. He obviously was no stranger to the industry. He had an unusual eastern European name…..So I Googled it. There it was, my Client was the current CFO of Chobani!!! WOW.
During the next conversation with my Client I revealed that I knew who he was and what his position was. He asked, “How did you find out?” I said, “I Googled your name and it all was there.” He proceeded to tell me that he and the Master Yogurt Maker were not happy at Chobani and they wanted to start out on their own. I asked why? He said, that they were with the founder of Chobani from the beginning and that the owner’s first efforts to create an artisan Greek Yogurt that was good quality had failed. It wasn’t until the Master Yogurt Maker from Turkey came along, applied and tweaked his formula that the company became a success with arguably the best Greek Yogurt ever.
The two of them were both my Clients now and they said they worked 12 to 14 hours a day, 7 days a week to get the company off the floor. They shared with me that the owner had always promised them equity in the company because of their efforts and successes in creating the fastest growing company in history. Chobani went from no sales to $1.2 billion in sales in 7 years. My Clients were major contributors to that success and it was becoming clear to them the owner of Chobani conveniently forgot his promise to my Clients. They had to strike out on their own and start their own yogurt company.
Prior to connecting with me, my Clients had been looking for a suitable plant for over a year with no prospects. We worked together daily searching the country for plants that fit their criteria. We found one in Alabama, Utah, Wisconsin and Maine. None of which were working. One day I read an article in a dairy publication stating that an Arla Plant in Muskegon, MI was closing. Reason, Arla was consolidating that particular cheese production back to Denmark. My research showed that the plant was 18 years old, 39,000 square feet, located on eight acres in an industrial park and with all the equipment in tact. Perfect!!!
I called Arla’s North American Headquarters in New Jersey and asked for the proper person to have some dialogue regarding the Muskegon Plant. I was referred to the President of Mergers & Acquisitions at the World Headquarters in Denmark, Thor Hvid.
Arla is a behemoth of a cheese and dairy company, and I’m Bob Wolter from Sturgeon Bay, WI. Thor was very professional and I presented my story and wanted information regarding the Muskegon Plant and if it was available for sale. After we went through a qualifying process with my Clients we got Thor’s attention and information flowed freely and we were given a value from Arla.
The next challenge was financing the deal. My Clients had enough equity to get a loan for an existing business, but after interviewing 6 banks with extensive business plans and revenue projections and profits, there were no takers. Regardless of their backgrounds and what they had accomplished for Chobani, they were still considered a start up business to the banks and required considerably more equity to secure the deal. What do we do now?
Meanwhile, our Seller is getting impatient because this financing process went on for over three months. Fortunately, there were no other serious Buyers out there for the plant or it would have been sold. Thor and his team continued to be patient and understanding and gave us additional time.
Out of the blue my Yogurt Maker Client had an investor friend that was willing and able to borrow a considerable sum to get the deal started again. Back to the banks we went and presented all over again and again 5 of the 6 banks said no, but one said yes!!!
We were working feverously, getting the financing and the legal team in sync and the closing scheduled. We were set for December 29th in Muskegon, MI. The Bankers were happy, the City of Muskegon was happy, the Chamber of Commerce was happy…everyone was happy to have such an entrepreneurial company in their back yard.
We toyed with the idea of yogurt for life as commission, but decided not to.
It was very rewarding to be a part of facilitating this deal to help our Clients fulfill their dream. We will be friends for life.
They started their first production in July of 2014. The new company is Philos Foods LLC. Check them out!
Jim Peschel/Jim’s Cheese
A few years ago I developed a relationship with the owner, operator of a Cheese Distribution Company. He was at an age where he was going to have to think about an exit from his business.
Through the process of getting to know him and his business, I learned that this was originally his father’s business and he had been working with his father since he was a teenager and he was at the time 68 years old. Needless to say his father taught his son very well and the tools that worked back then were a bit outdated in 2012. He had been operating his business probably the way his father taught him and that was to be involved in all aspects of the business.
This business was his life’s blood. He lived and breathed it every day. He looked over the production line, the packaging line, the sales, the inventory, the customers and their orders. He could go in his storage areas, look at his inventory and knew what and how much he had to order without referring to the records. Most everything was documented with paper records. The computers and their systems were tools he resisted vehemently.
He was old school and the world was passing him by. His children worked with the company and he openly communicated to me that they were incapable of running the company. So, there was no apparent heirs or family transfer. His work and the stress of his responsibilities were beginning to affect his health. He was adverse to delegating responsibility because he felt no one could do the job as well as himself. His wife saw this and put a lot of pressure on him to engage us, CBS-Global to sell his company.
We started with the valuation process, with the financials and inventory and all the details one needs to perform a valid assessment of value. We came to agreement on a value that would satisfy his needs for retirement. We came to agreement as to the terms of our working contract together and the day before we were to meet and get started, he called to inform us that he can’t go through with the process now and wants to wait another year…. This was unexpected and really tested our patience after all our meetings, discussions and the time put in to prepare bringing his business to market.
So, we wait and being professional, knowing that once we do market the company there will be a lot of activity to the point where we could create a competitive environment with potential buyers. We continued to communicate with our Seller and keep a pulse on him, his business and his health. Almost to the day a year later, he calls and says he’s ready.
We get the contract signed, the marketing book formulated and the confidential listing posted on various websites. We start to get a lot of activity and are in the process of qualifying the buyers. We had a number of conference calls with potential buyers and some face to face meetings, which we thought were promising. Our Client, on the other hand, was not seeing anyone in his eyes that was credible and was starting to question our process. I assured him that this could take some time before we find the right personality and culture philosophy to meet with his approval, but it will happen.
Then came along a young man with a background in supply chain, logistics and distribution experience. In our eyes, he would be able to digest and understand the business and bring it to the next level. Only problem, he was having difficulty securing financing and our promising buyer wasn’t so promising anymore. CBS-Global tried to assist with various sources we had, including the Wisconsin Economic Development Association. Our client had his doubts and was apprehensively looking to meet our next prospects. I stayed in touch with our financially deficient buyer as to his progress with creative financing.
One day our deficient Buyer announced that he met a childhood friend, who was well heeled, his family had a history of being in the same industry and was interested in partnering with our Buyer. This was good news, for the financing issues were not issues any longer. The next challenge was the chemistry with our Seller and these two younger men. Our Client felt their learning curve would be too steep and had big doubts.
I suggested that during the process of an accepted offer and the close that the buyers be able to be involved in the everyday operations, thinking that when the close came things would be a bit smoother. The other element we incorporated was an employment agreement between our Buyer and Seller for a period of 6 months to help with the transition.
Our Client’s heartburn relaxed a little bit. Next step was a conversation with our Client about legal representation and our recommendations to handle the closing. Our client was uncomfortable entrusting a stranger to handle the transition of his company, which was his life. He wanted to hire his family attorney because there was a 30 year element of trust there. Problem was his attorney was not versed in M&A transaction this large and we knew there would be issues.
A meeting was scheduled to have the Buyer and his M&A legal team present the “Offer to Purchase” to our Client. The attorneys representing the Buyer were very experienced and professional and presented a 225 page document as the “Offer to Purchase”. Our Client didn’t understand and was very upset. Our Client’s attorney showed no such behavior, but we knew he was way over his head. Fortunately, the Buyer’s counsel saw this. They were very accommodating through the process and helped our Client’s attorney along the way. As a result he looked good to his Client and things moved along smoothly.
On closing day, documents were signed, hands were shook, with many smiles and congratulations. Our Client’s wife was happy, but our Client looked like he lost his best friend. He had an employment agreement for the next 6 months and by God he was going to show these boys how to run his company. Two months later, he was so cantankerous the new owners locked him out. After that he settled down and accepted the fact that there was more than one way to successfully run His Company!
The new owners took there time learning the business, implemented new systems and brought it into the 21st century, creating many efficiencies in the process.
The business that began in 1955 now had a new look and feel. I run into the new owners often at industry events and their business is growing at a good pace and looking to expand.
Tribute from Philos Food
Recent Cheese & Dairy Transactions