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Mergers and Acquisitions Intricacies with Raymond James

It's time again to dive into the exciting world of mergers and acquisitions with our friends at Raymond James!

After learning about 2022 M&A activity, the 2023/24 ice cream outlook, and best practices when selling your ice cream business, Managing Director John Barrymore now teaches us about the intricacies of the ice cream M&A landscape.

Read on to learn more about the evolution of M&A in our industry, what to expect in the coming years, and best practices to build value for your business.

Q: For those unfamiliar with Raymond James, tell us more about what you do and how to leverage your services best.

A: At Raymond James, we advise business owners who want to sell their businesses in the ice cream industry. These highly complex transactions include legal, accounting, tax, and due diligence aspects. Being so complex, they can take six months or longer to complete.

In a sale transaction, every business being sold has a story. That story encompasses a business’s past as well as the potential for its future. I’m responsible for telling that story as clearly and positively as possible and guiding the transaction to success.

My other main role is to assist in the aggregation of information on the business. This is the work involved in preparing a company to successfully endure a due diligence examination.

After that, I act as your primary negotiator to drive the best terms and value possible out of the deal.

But we also help ice cream company owners who don’t currently have any specific objectives in mind. In these situations, we serve as a resource on industry information and market conditions until the time comes when they may be ready to consider their options.

In actuality, this happens quite often. We often build client relationships for two to five years or more before they consider a transaction.

Q: We all know how quickly the ice cream industry changes. In your opinion, what are the biggest differences in today’s M&A landscape compared to previous years?

A: We talk a lot about our model – a four-phase cycle of growth, capacity, scale, and innovation.

Most recently, we’ve been in the scale-building industry phase. This is typically followed by the innovation industry phase, where R&D and new product development are paramount. As a result, a lot of the M&A focus right now is on companies that emphasize innovation.

But we also need to remember that the cost of capital for larger players differs from that for smaller players. And the increasing interest rates have only widened the difference! As a result, the larger players can still afford to buy smaller players – but the same can’t be said about the smaller players.

Therefore, we can expect that M&As will be more top-down rather than lateral. Of course, it’s still conditional to demonstrating business value.

Q: You’ve been studying the ice cream industry for many years. How do you expect the M&A landscape to look in the next 3-5 years?

A: There’s been a proliferation of many new brands during the last 7-8 years, which has recently created substantial shakeouts and consolidation.

Today, there aren’t many independent ice cream brands left that are large enough to be highly sought after by the larger players. And bigger players, for the most part, don’t need any more brands unless they’re highly differentiated (for example, in the permissible indulgence sub-category).

We predict the consolidation trends trickling down to the suppliers and distributors in the industry. Why? Because being large enough to have a say in the relationships with the largest players will be crucial.

Q: What exactly is EBITDA, why does it matter, and how can you generate a strong EBITDA?

A: You hear a lot about EBITDA because it’s a common metric representing the operating profit of a business irrespective of its tax rates, how it’s capitalized, or whether assets are fully depreciated. There’s no magic to it: It’s simply how the finance industry views profitability. The more profitable you are, the better your EBITDA becomes.

There’s a common misperception that the market conditions translate into multiples. But the reality is that it’s on a case-by-case basis, depending on factors such as distribution, growth opportunities, and margins.

There really is no specific multiple. We encourage people not to focus on multiples because the value is based upon future business prospects 5+ years later, translated into net present value.

Q: We often hear about the “second bite at the apple” concept. What does this mean, and when does it most likely occur?

A: When sellers sell some of their company but retain a portion, that portion is known as the “second bite at the apple.”

This situation often occurs when the business potential depends on personal relationships, like certain distributor-customer relationships. In those cases where the continuity of the personnel is key, retaining the original owners and their team is not only required but also a winning strategy.

When the company is sold again down the road, the “second bite” is the incremental value that the business owner realizes in that subsequent transaction.

Q: What’s the best way to create business value in the ice cream industry?

A: Companies that are creating business value have something unique.

For brands, that means being an innovative engine. They offer a new experience and usually demonstrate:

  • The ability to build alignment between internal R&D and external resources (e.g., ingredient suppliers and product innovation houses),

  • An incredible sales and marketing team that knows how to sell and launch first-to-market innovation (not the same sell as selling “well-known products”), and

  • A strong network of copackers to produce these items.

For distributors, a similar logic applies. Ideally, the uniqueness would come from exclusivity deals. Since these are becoming scarcer, value is now being created via operations, including fine-point technology, performing software, and energy-efficient investments.

Overall, building differentiation and staying ahead of the game for the future is more important than having an immediate cash flow.

Q: What’s the best advice you could give us going forward?

A: Calculate your true costs of doing business by customer, and stop avoiding the challenging decisions of letting go of unprofitable business.

Brands might make these types of decisions occasionally to build brand recognition. However, distributors have less opportunity to create value from unprofitable revenue. That makes it more important to let go of these sales and focus instead on where and how to build the most profitability.

For example, if a distributor has 5M in revenue but 1M is unprofitable, it would create more value to remove the $1M unprofitable business than to keep it.

We hope these tips help you deepen your knowledge of the M&A landscape in the ice cream industry. For more information, connect with us!



Founded by former executives in the ice cream industry, INNODELICE aims to create a worldwide ecosystem of solutions within the frozen dessert industry. Thanks to the relationships fostered by INNODELICE, manufacturers, brands, importers, distributors, and suppliers can discover, buy, and sell solutions to grow their businesses. These solutions include co-manufactured and branded products and innovative and competitive ingredients, packaging, and services. Our collaboration model generates lower costs and fewer risks for our participating partners while optimizing their time to market. To learn more about INNODELICE, contact Andrea Montreuil or visit

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