PE HUB PartnerConnect Highlights from Day 1 - Arbor Investments

June 27, 2018

One of the highlights of PartnerConnect from Tuesday was hearing Greg Purcell, CEO of Arbor Investments, talk about the firm’s investment in Columbus Manufacturing. Arbor acquired Columbus, a 100-year old deli-meats company, in 2012. The transaction may have won Middle Market Deal of the Year from Buyouts Insider in 2017 but it wasn’t always easy. “We didn’t have a five-year sunny run,” Purcell said to a crowd filled with LPs, GPs and bankers. “2015 was a disaster.”

Avian flu caused turkey prices to jump that year, which in turn pushed Columbus’s EBITDA to contract by $10 million. “Banks loved us, then they hated us,” Purcell said.

Purcell also talked about hiring a chief executive to lead Columbus. CEOs from large corporate America are “99 percent set to fail” at portfolio companies, Purcell said. There are no support staffs for such executives, who typically spend lots of time “writing memos,” he said. Arbor ended up tapping Joe Ennen, who came with 20 years in the food business, including management roles at Safeway and Frito-Lay, to become CEO of Columbus. “We got a terrific guy with Joe,” Purcell said.

The Chicago PE firm did receive an offer from a European strategic at the end of 2015 for Columbus but didn’t sell. Instead, Arbor ended up running a strategics-only sales process for Columbus last year that resulted in Hormel Foods buying the deli meats company for $850 million. Arbor made 7.8x on the deal.

“This is a ‘get rich slow’ scheme,” Purcell said of Arbor’s five-year hold. “Slow and steady wins the race.”

By Luisa Beltran