March 20, 2013
Interviewed by: David Snow
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Consumer Trends in the Middle Market

Martin Okner, Managing Director of SHM Corporate Navigators as well as President of ACG New York, gives an overview of consumer trends affecting the private equity opportunity in that sector.

Martin Okner, Managing Director of SHM Corporate Navigators as well as President of ACG New York, gives an overview of consumer trends affecting the private equity opportunity in that sector.

You have a lot of experience in the consumer space. What are the opportunities like in the middle market?

Okner:          Well, private equity plays such an important role in the consumer market. I actually came from a large-cap background in the consumer space. So, I was with Philip Morris, Cadbury, as well as Revlon. And when you look at what role private equity plays in the middle market, I don’t think that that’s really changed. But with the sheer number of private equity firms increasing—and they have increased so much over the past five years—there’s a great amount of capital available for smaller middle-market niche brands that really need the expertise, as well as the capital, to grow to reach that point of inflection where they might be considered by a large-cap firm as a potential acquisition target or complement to their portfolio. And that’s really the role that private equity has played with a lot of these companies in taking a product that might have some really unique attributes or could be a category game changer. But it might only be $10 million in sales, which it wouldn’t be on the radar screen of a multibillion-dollar large-cap company. But with the right resources that private equity brings, both from a financial perspective and also from an industry expertise perspective, they’re able to realize the distribution growth in a way where the business fundamentals evolve and they stay profitable through those points of inflection. And they really provide a critical role in growing the large-cap firms as they look to make strategic acquisitions, so I think that’s going to continue.

 

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