Insights & Info

Insights > Watching Middle Market Private Equity in Action

Watching Middle Market Private Equity in Action

By Generational Equity

Middle Market Private Equity

From time to time we like to highlight a middle market private equity firm’s recent transaction history to shed some light on how these firms operate and how they focus on growing and expanding their holdings.

In this piece we are highlighting Huron Capital’s platform, Ronnoco Coffee, and its recent acquisition of Beverage Solutions Group. This deal caught my eye for a number of reasons. First, the facts:

Ronnoco Coffee, a portfolio company of Huron Capital, has acquired Beverage Solutions Group. This is the eighth add-on acquisition for Ronnoco since being acquired by Huron Capital in September 2012. Beverage Solutions Group (BSG) is a provider of beverage equipment to convenience stores, food service locations and offices. The company’s products include creamer and sugar stations, sugar and sweetener stations, and other custom dispensing machines.

And here is the description of Ronnoco Coffee:

Ronnoco Coffee roasts, blends, grinds, packages and distributes coffee and teas under six primary brands: Ronnoco, Seattle Roast, Wild Horse Creek, Henderson, Coffee House and Camellia. The company also provides a variety of other beverages, such as cappuccino, hot chocolate, and smoothies, and coffee-related products and equipment, including cups, flavoring syrups and condiments.

Note the clear synergies in this transaction. Beverage Solutions Group and its products market to the same customer base that Ronnoco and its other brands focus on. These synergies are key.

We have no idea how many other suitors Beverage Solutions was courting at the same time. Nor do we know how many other targets Ronnoco/Huron were examining before making this investment. Odds are good that there were quite a few on both sides. The important issue to realize here is that the intangible assets (aka, off-balance sheet assets) were what ultimately caused Ronnoco/Huron to take the leap at this opportunity. 

We have examined off-balance sheet assets before. These are items that are nearly impossible to quantify on your balance sheet but they are usually the most important component of any transaction. Think of it as the old 2 + 2 = 8 theory.  

The fact is that when a seller is not represented by an investment bank like Generational Equity, they often undervalue their intangibles, such as business methodologies, customer list, and brand recognition. Peter Drucker, one of the leading management gurus of years past, put it best when he famously said, “the buyer rarely buys what the seller thinks he is selling.” 

This really applies when you consider your business and tally the list of intangibles that make it unique. If you think your buyer is only buying the present value of your future earnings, you have already undervalued your opportunity. You must consider what different buyer groups would find attractive about your business and, once you have done so, emphasize those intangible assets in all your documentation.

The Beauty of Add-Ons in Middle Market Private Equity

The second feature of this transaction that caught my attention was the sheer number of additional acquisitions that Ronnoco has made since Huron partnered with them in 2012: 

This is the eighth acquisition Ronnoco has made since being acquired by Huron in September 2012. The company previously acquired International Blends, Henderson Coffee, the coffee and tea business of Love Bottling Company, Biff’s Coffee, Beverage by Quench, U.S. Roasterie, and Black Waters Coffee Company. “For over 20 years, Beverage Solutions has provided high-quality products and equipment along with excellent customer service,” said Matt Hare, a partner at Huron Capital. “The addition of Beverage Solutions expands Ronnoco’s national footprint from 35 to 43 states and provides additional distributor relationships.”

As we have described before in past posts, this type of add-on activity is quite common amongst equity firms that focus on middle market companies. An initial investment in a platform company is made, and multiple, usually much smaller, companies are acquired over the course of 5-10 years (sometimes even longer in the case of family offices). The goal: To build a much larger, highly synergistic firm with the goal of selling it or taking it public in the future. 

This is clearly the case with Huron with eight add-on acquisitions over the span of seven years. Odds are really good that there are several equity firms like Huron operating in your industry. Since they usually fly under the radar screen to avoid publicity, you may not even be aware of them.

But we are!

We have over 34,000 registered buyers in our buyer database, a good portion of which are equity firms that have given us very specific criteria of what they are looking for in add-on acquisitions. Plus, our deal teams are extremely experienced in working with and negotiating transactions with these firms. They know how to package documentation to highlight a company’s intangible assets and which equity firms (plus other buyer types) to approach that will pay a premium for these off-balance-sheet assets.

If you would like to learn more about how these types of firms operate and why your company may be of interest to them, visit our website, provide us with your contact information, and we will be in touch.

And kudos to Huron for having such a brilliant plan and executing on it so efficiently!

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2021 Generational Equity, LLC. All Rights Reserved.

Make an informed decision

The best decisions in life are informed decisions. We release educational business insights like this every week. Subscribe to make sure you don’t miss the latest news, views and analysis.


Success, you have been added to our list.

I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!
Tom Currier, Former President & CEO, Rackmount Solutions
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios