Category Bob Wolter’s Cheese and Dairy Blog

The US-Mexico-Canada Agreement (USMCA) Brings Relief to the Nation’s Dairy Industry

In May 2019, the United States announced an agreement with Canada and Mexico to remove all tariffs on steel and aluminum imports from those countries and for the removal of all tariffs on American goods including dairy products, bringing much needed relief to the US Dairy Industry. The Dairy Industry and CEO Tom Vilsack of the US Dairy Export Council, has praised the Trump administration as well as Mexico and Canada for their collective efforts on getting this deal done.  With this agreement in place, it will ensure that US, Mexico and Canada will maintain and grow their respective markets

Alliant Energy Center, Madison, Wisconsin – 2019 US Cheese Expo

Creative Business Services/CBS-Global was represented by owner Michael Schwantes and M&A Advisor, Bob Wolter at the 2019 US Cheese Expo in Madison last week.  2019 is the third time we had a booth at the show and this year’s event was very well attended. We worked our booth on Wednesday and meet many Dairy individuals that were interested in learning more about our services and the help we can provide as a specialist in the industry.  Additionally, we connected with many, many acquaintances and friends we have gotten to know the last dozen years or so. Thursday’s seminars and events

Seller be Prepared

The buyers in this market are trending to be very careful and diligent in their approach because the tell-tale signs of an economic slowdown are on the horizon.  I have seen much more scrutiny from banks and lenders in their underwriting and the process for financing a deal is becoming more demanding in mitigating any risk.  As a result, the buyers are looking for acquisitions of premium quality. To the owners who want to sell their companies, it is strongly recommended to have a solid management team, other than the owner, that will stay on after the sale and is

Deal Communication and Technology

Today’s technology has made it a lot easier for M&A professionals. Information about buyers and sellers is readily available online, which allows buyers to find and act on deals all across the country and from under the radar sources which weren’t available before.   If one is heavily relying on technology to assist in the deal, it can slow the process down and increase the amount of time it takes to do a deal.  Even when today’s technology can shorten the time period to perform the due diligence process, it can be difficult to develop a relationship and an understanding of

Tax Legislation Impacts the Next Move

The current Tax Proposal Bill could have huge impacts on companies deducting corporate interest.  The proposed bill will only allow companies to deduct interest up to 30%.  This will be a big change from the current 100% deductibility of interest. Private equity firms rely on leverage and would be hurt by not being able to deduct the interest from their companies’ taxable income.  Leveraged buyouts rely on a tax shield to embellish their returns.  Also, this will be huge for non-traditional bank lenders, who will have to figure out new ways to conduct business. Conversely, this may not be so

The Bogus Trade War Victory is Bogus for the Dairy Industry

The Canadian Trade War “Victory” Claims for U.S. Dairy are Bull Flatulence! “Victory” shouts from the likes of President Donald Trump, Wisconsin Governor Scott Walker and the dairy co-op lobby — National Milk Producers Federation are hollow! The recent United States Mexico Canada Agreement (USMCA) accomplishes virtually nothing for U.S. Dairy Farmers and processors, in terms of dairy exports to Canada.  The deal only allows for microscopic volumes of dairy exports to be allowed to enter Canada.  The current deal is for 6 years (2025).  The percentage of our fluid milk production goes from 0.0003% to 0.002% over 6 years

Exclusivity Period/No Look Period during Due Diligence of an Acquisition

In the acquisition process after the “Letter of Intent” has been agreed to and signed by all parties, there is a “no look” period in which the potential buyer has exclusivity for a period of time prior to the date of purchase, usually 45 to 75 days, depending on the size of the deal. The biggest risk to the seller is that the buyer is not moving things along in good faith.  It may be clear the deal will not likely be consumated, but the seller is still bound to the exclusivity period and has to wait.  In the meantime;

Strategic Buyers vs. Financial Buyers

These two kinds of buyers have fundamental different goals.  In the M&A world, strategic buyers often pay higher multiples than financial buyers.  In many instances, strategic buyers are looking at different elements of the acquisition and they may have different mechanisms in which to generate a healthy return on their investment. Strategics often have an existing customer base and relationships they can leverage with acquiring a company. They want to acquire customers to rapidly increase their market share.  One of the largest synergies that companies seek to formulate is a one stop shopping scenario. When a financial buyer acquires a