All Gold Imports Inc.
With family roots in the food industry dating back to 1899 in South Africa, it’s no surprise that Louis Pillemer followed suit. He always knew that he wanted to go into business for himself. So too, did his brother Gary and their neighbour in South Africa, Jason Berman. Entrepreneurship was in their blood.
After graduating from university in South Africa, the three young men emigrated to Canada and went to work to gain experience and understand the Canadian business mindset. Louis found a job with a financial institution, Gary in sales at a hardware company, and Jason worked as a sales representative for a gourmet food company. Within a few years, the three of them were ready to take the leap. They quit their respective jobs, launched a few businesses that floundered, and eventually bought an Italian wholesale food company to acquire specific assets and provide a foundation on which to build. They transitioned the business into a bakery and wholesale company, known as All Gold Imports.
Today, All Gold is one of Canada’s major suppliers of natural food ingredients such as dried fruit, coconut, raisins, seeds, nuts, frozen fruit, and cocoa products to food manufacturers across Canada, with some clients in the US and an office and warehousing facility in Sydney, Australia. “Before it was the thing to do,” recalls Louis, “we concentrated on supplying first- rate ingredients without compromising quality. We searched long and hard to find the best factories in the world and were ahead of the curve on supplying quality ingredients.” Indeed, All Gold holds true to their company motto – We only buy ingredients that we’d feed our own families.
In 2006, Louis brought a fourth partner on board, Brian Goldberg. “I spent an entire year getting to know him better – learning about his character and determining if he would be a good fit,” explains Louis. “It turned out to be a great decision. Brian introduced frozen fruit to All Gold’s product line, which has become a growing component of our business.”
After years of steady organic growth, All Gold eventually hit a plateau. “We tried for a couple of years to expand outside of Canada,” explains Louis, “but we didn’t have the skill set, appetite, or resources to do it ourselves.” What was their biggest hurdle? “We were too engrossed in the day-to-day operations of the business. We couldn’t remove ourselves from the small business mentality.”
When the four partners reached middle age, they decided it was time to give serious consideration to planning for the continuity of the business. As Louis describes it, they had three options: 1) continue to operate the business as is, and eventually wind it down; 2) bring their children in as potential successors of the business; or 3) sell a portion of the business to acquire the skill set and resources that were needed to take the business to a global stage.
According to Louis, the first option was not a viable option as he and his partners were not prepared to let the business go. “I knew we had to find a way to keep everyone on the same page without damaging the business. We have never had a major argument across the partner group. I didn’t want our succession to change that.” Option two was also not viable. “Amongst the four of us, we have a number of children with potential to become leaders of the business, but we knew it could get very complicated and very messy,” says Louis. In the end, they realized that bringing children into the business could cause major problems, and they wanted to encourage them to pursue their own passions. Louis, Gary, Jason, and Brian therefore decided on the third option and kicked into high gear to sell part of the business.
“Fuller Landau had been our accounting firm since the beginning,” says Louis. “They had advised us on all areas of the business and we trusted their guidance. So, it was only natural for us to reach out for assistance in finding an investor.” Louis got in touch with Jonas Cohen, partner of Fuller Landau’s M&A practice, to start the process. “I liked that Jonas is a straight shooter,” explains Louis. “You genuinely feel that he has your best interests at heart.”
Jonas worked with Louis to define the parameters of the search – namely, they did not want to be micro-managed and they were not interested in investors with a short-term view of the business. “We weren’t looking for a partner that wanted to exit in five years,” recalls Louis. “We wanted a permanent partner who would bring expertise to transform us from a family-run operation into a fully scalable business.”
Jonas brought several options to the table and the four shareholders of All Gold quickly narrowed the list down to one – Regimen Equity Partners Inc. “They came to the table on a partnership basis,” explains Louis. “Their time horizon was 10 to 15 years which fit in nicely with our objective. Fuller Landau served as the go-between for both parties, allowing us to remove the emotional side from the equation, and ensuring that we resolved any potentially contentious issues before signing.”
The deal closed in November 2016. The four partners of All Gold sold 51% of the business to Regimen, with measures in place to protect the minority shareholders. “It was a simple process because we were well-aligned from the very beginning,” says Louis.
Regimen Equity Partners is a private equity firm specializing in the ownership transition of small to mid-size organizations. With offices in Toronto, Edmonton, and Vancouver, Regimen’s portfolio companies span from British Columbia to Quebec. “We help grow businesses through strategic acquisitions and building out the management teams,” explains Cooper Seeman, Managing Director of Regimen, based out of the Vancouver office. “We don’t follow the five to seven-year hold period that private equity firms typically plan on. We invest in companies with a view to own for 15 years or longer. This is not a traditional approach. It allows us to think and act like business owners.”
According to Cooper, Regimen is very selective when it comes to the companies in which they invest. “It takes a long time to find a company that we like enough to commit to being a long-term partner,” he says. So, what attracted Regimen to All Gold? “Louis and the management team are top-notch people,” explains Cooper. “I can’t say enough great things about them. They are focused and very passionate about their business. They had a compelling reason to bring on a partner, and we saw eye-to-eye on the plan going forward. We are in this together.”
As it turns out, the deal was a win-win situation for all parties. Louis has since transitioned from a tactical role to a more strategic focus, with a concentration on growing the business. He has hired a CFO/COO to relieve him of some of the day- to-day responsibilities and has achieved his two-year goal of professionalizing the business (by implementing greater structure, setting up a board, and creating departments with clear lines of accountability) in less than twelve months. With Regimen’s assistance, All Gold is now actively looking for business acquisition opportunities in the US and other geographies outside of Canada. “Our goal is to grow the business to five times its current size, with multiple offices in different countries. We’re off to a great start,” explains Louis.
SO, WHAT SAGE PEARLS OF WISDOM CAN WE GLEAN FROM THIS M&A SUCCESS STORY?
In Cooper’s words: “Going for the highest price isn’t necessarily the best business transaction if you want to stay in business or preserve your legacy. Be mindful of the cultural differences between Canadian and US investors. Many US investors will come in with a high price to win the beauty contest, intending only to find fault with the information provided, in order to ultimately transact at a lower price. They aren’t local, so they may not care about their reputation in Canada. A failed process can waste a lot of time and cause you to lose employees due to uncertainty. In the end, go for the option that provides the greatest long-term value and the highest likelihood of successfully closing.”
And from Louis: “Learn from failure. Don’t let failure bring you down. Instead, understand why you failed and use that as a means of doing better the next time. I wouldn’t be where I am today if I hadn’t learned from my past mistakes.”