Partnering with Growth Oriented Founders
Cloverhill Bakery (“Cloverhill” or the “Company”) is a leading manufacturer and supplier of individually-wrapped, shelf stable sweet baked goods. Based in Chicago, Illinois, the Company has grown since 1961 from a local vending business, to a nationally recognized producer of branded and co-manufactured baked goods. Cloverhill’s product portfolio includes over 30 formulations and 300 SKUs, including fold-over and round danish, cinnamon rolls, honey buns, donuts, muffins, crumb cakes and cream-filled cakes. Cloverhill operates a modern, high volume manufacturing platform consisting of two world-class bakeries in the Chicago metropolitan area. The Company sells its products through multiple channels including co-pack, grocery, vending, club, QSR and other retail outlets. Quad-C partnered with the owners in October 2009, two brothers who were third generation of the founding family, in a recapitalization transaction. The brothers were looking for partial liquidity but wanted to remain with the business as executives and substantial owners and therefore a growth oriented partner was important to them. Quad-C was attracted to the business as the founding family members had a tremendous track record and had proven their ability to add customers, improve the Company’s scale and profitability and penetrate new distribution channels.
Executing the Strategy
With the support of Quad-C, management executed on the value creation plan which included:
- Capacity expansion to meet customer demand – opened a new, world class bakery in Cicero, IL in late 2010 that reached full commercial scale in early 2012. The Company continued to invest throughout a period of softness in the baked goods industry, in contrast to many competitors.
- Product line diversification – launched new product lines including mini muffins and crumb cakes and refreshed packaging.
- Channel diversification ‒ added significant sales in retail, co-pack and QSR, thereby decreasing concentration in vending and club.
As a result, Cloverhill grew sales by more than 80% and invested approximately $100 million in growth capital during Quad-C’s investment period.
Given the company’s strong organic growth and product diversification, Quad-C sold the business to a strategic acquiror in March 2014. The investors, including management, realized a significant return.