McGuireWoods’ food and beverage and private equity groups, alongside senior executives in the industry, recently shared insights into industry-specific deal trends in the marketplace at an event in the firm’s Dallas, Texas, office on Nov. 6. Here are the top takeaways from those discussions.To see a taped version of the full seminar, please click here.

  1. Don’t Forget the Basics. Despite the recent additional regulations, most citations address basic violations, such as sanitation problems. When touring a facility, look at the little things like whether employees recognize their supervisor and to the cleanliness of areas such as ceilings.
  2. Diligence Gaps. When conducting diligence, look for potential gaps. For example, is there a recall plan? If so, is it longer than a paragraph? If the answer to either question is no, then consider whether the target has adequately prepared for a potential event like a recall.
  3. Additional Capital Sources. Investors remain interested in food and beverage transactions. While traditional private equity and strategic buyers continue their acquisitions, family offices have looked at and made investments in these deals. Also, strategic food and beverage companies are acquiring emerging brands and ideas with the companies’ in-house venture capital and investment funds. The strong deal pace looks like it will continue.
  4. New Ideas. Entrepreneurs continue to innovate. Ingredients, perhaps once considered only a commodity to be acquired at a favorable price, are now integral parts of a product. Nutraceuticals, for example, have drawn the interest of investors.
  5. Food Fraud. With increased innovation, there is greater risk of fraud. Products, or even ingredients, may claim to be or do one thing, but in some cases little to no scientific evidence supports these claims. Industry members need to consider how this affects their products and their labeling.