Based in Irvine, CA, Advantage Sales & Marketing LLC (“ASM” or the “Company”) was a member-owned cooperative formed in 1997 as a platform to bring together a number of leading regional sales and marketing agencies (“SMAs”). Between 1997 and 2003, 24 regional firms joined ASM as members. These members went to market together under the “Advantage Sales & Marketing” banner, and coordinated certain aspects of their operations including back office and client services to support the Company’s national clients and customers. Following an initial investment in one of these brokers in 2001, Allied Capital Corporation (“Allied”), a leading private equity and business development company based in Washington, DC, acquired a majority stake in ASM and converted it to a conventional corporate structure in June 2004. Under Allied’s ownership, ASM embarked on a consolidation strategy with a view to unify the former Advantage member businesses under a national umbrella.
Between 2004 and 2005, ASM completed a total of 16 tuck-in acquisitions, creating the leading fully-integrated SMA in the United States, providing outsourced sales, merchandising and marketing services to manufacturers, suppliers and producers of consumer packaged goods (“CPG”). ASM was one of the first SMAs with the scale and scope to accommodate the national coverage and support requirements of major CPG manufacturers. At the time of the sale, ASM employed almost 13,000 associates, represented clients whose annual wholesale revenue in all classes of trade exceeded $40 billion, provided services on behalf of over 1,200 CPG manufacturers and managed more than 8,000 food and non-food SKUs.
“When we were told by our partners at Allied that the decision to sell the business was being contemplated, we wondered who the investment banking firm would be that would handle such an important assignment for our management team. When told the firm being considered was Sawaya Partners, we were initially surprised as we had not heard of them. Following a meeting with the principals, we were convinced that Allied had made the right decision. The Sawaya Partners team took the lead in preparing the information memorandum, helping us craft the ASM story, coaching our experienced team for the management presentations and being on our side every step of the way. They even helped us negotiate our management incentive packages. We could not have hoped for a better team and believe Allied made the right choice.”
SONNY KING CHIEF EXECUTIVE OFFICER, ADVANTAGE SALES & MARKETING LLC
ASM represented Allied’s largest investment in its history. Recognizing the value creation that had been achieved through the consolidation and the attractive M&A environment at the time, Allied reached out to Sawaya Partners to effect an expeditious sale process. Allied had previously interacted with Sawaya Partners “on the other side” of a transaction that led to its acquiring Pharmaceuticals Holdings, Inc., an OTC portfolio company, from Catterton Partners in December 2004. Allied believed that Sawaya Partners could devise a process that was designed to efficiently and effectively identify a compatible new financial partner for ASM’s superb management team and achieve full value – all without disrupting management’s focus on operations, its pipeline of acquisition opportunities or the introduction of new, high value added, marketing services. Without a formal “beauty contest” Allied determined that Sawaya Partners was best positioned to market the ASM story.
Allied was confident that an aggressive timetable could be met without compromising on quality and buyer interest. Based on a careful review of prior transactions and an assessment of strategic and financial buyer psychology, it was concluded that the effort would be largely targeted to the financial sponsor community. Both Allied and Sawaya Partners recognized that ASM would represent an attractive investment opportunity to many financial sponsors. The challenge arose from the careful screening required to yield a broad and yet targeted sales process. Specifics of the process timeline are shown below: