There is a stigma among private label food companies that they are not of the same quality as more recognizable brands. But this is changing as these businesses are ramping up their manufacturing and marketing to compete with the better-known food makers. Here’s why private label food companies are becoming attractive to private equity buyers.
“You are seeing real growth in activity among private brand co-manufacturers,“
– says Alan Scharfstein, founder and CEO of mid-market investment bank DAK.
“They are selling, but they do sell at lower multiples than branded product companies. Branded consumer companies still command a premium in terms of multiples of EBITDA, but there is some compression going on between the multiples,” he says.
“There’s a discount in terms of the multiples that are being paid for a private brand company versus a true consumer branded product.”
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