Buying the Factory, Not the Logo

What this year’s food deals are teaching me about the leaders who actually make them pay off

A managing partner at a mid-market private equity firm said something to me a few weeks ago that I keep coming back to.

His last three food deals had almost nothing to do with the brands on the packaging.

A co-manufacturing site.

A specialty ingredients line nobody else could easily copy.

A business sitting on a sourcing position in a tight commodity.

The consumer names attached to them barely came up in his investment committee. The factory, the formulators, the supply position. That was the thesis.

A few years ago that would have sounded strange. Now I hear a version of it most weeks.

For a long time, food M&A was a brand story. A big player wanted a fast-growing challenger. Paid a full price. Bolted it on. Hoped the heat carried over. And the leadership briefs that landed on my desk afterwards wanted brand builders and commercial storytellers, because that is what the asset was.

The deals I am seeing through my clients this year are different.

And the difference changes who you need to run them.

The asset has changed

Buyers have gone quiet and picky.

Mondelez’s chief executive caught the mood earlier this year. An acquisition has to hand you a real competitive advantage or lift your growth rate, he said, or it is not worth doing. I hear that caution everywhere. Fewer deals getting signed. More conviction behind the ones that do.

The interesting part, if you are the one hiring leaders, is what they are buying.

The analysis keeps landing in the same place. Co-manufacturers. Specialty ingredient suppliers. Assets that strip cost and risk out of a supply chain. One way I saw it put recently stuck with me, because it is exactly right. Brands come and go. Capacity and capability are sticky.

The Barry Callebaut cocoa spin-off being talked about in the trade press tells the same story. The value sits in owning the hard, technical, difficult-to-replicate parts of the chain. Not the name on the front of the pack.

There is a logic to it that goes beyond caution. A strong brand can be copied, undercut, or fall out of fashion in a single buying cycle. A plant running at high yield with a clean safety record, a protein line protected by know-how that took fifteen years to build, a long-term contract on a scarce raw material. Those are far harder for a competitor to take away from you. In a market where organic growth has slowed to a crawl for the big players, owning something genuinely difficult to replicate is worth more than owning something merely popular.

One word of caution if you are dropping any of this into a board pack. The headline values on the big deals last year move around depending on whether you count earnouts and tax effects. Check the number against a primary source before you commit it to paper.

A brand needs a storyteller. A factory needs something else

This is where it gets real.

Buy a brand, and the value runs through the commercial team. You want a CMO who can reposition. A sales leader who can win listings. A chief executive who can tell a growth story to the next buyer down the line. The skill set fits the asset.

Buy capacity and capability, and the value runs somewhere else entirely.

Through operations.

Through the technical function.

Through the slow, unglamorous craft of integration.

The leader who unlocks this kind of deal is the one who takes a well-run plant and makes it run better. Who folds an ingredients line into a bigger group without breaking the thing that made it worth buying. Who holds onto the technical people, the ones who walk the moment the culture turns.

Different person. Different track record. Different brief entirely.

I have watched good deals stall because the sponsor reached for the leader the last deal needed, not the one this asset needed. A brand-led operator dropped into a co-manufacturing business. Six months spent working out why the night shift matters. The technical director gone by month four. The asset was fine. The fit was wrong.

It cuts the other way too. Hand a brilliant plant operator a business that still lives on its retail relationships, and you can end up with a beautifully run site and a commercial position that quietly fell apart while nobody was watching it.

Why this keeps catching good investors out

None of this is news to the people making these decisions. So why does the wrong hire keep happening?

Part of it is pattern memory. A sponsor who made strong returns backing a charismatic, commercially-minded chief executive reaches for the same profile next time, because it worked before. The trouble is the asset underneath has changed, and the profile has not changed with it.

Part of it is that the operational and technical leaders who create value in these businesses are quieter. They do not present as well in a two-hour meeting. They are not selling themselves the way a commercial leader does, because selling is not their craft. Backing them takes a bit more digging and a bit more conviction, and under deal pressure that work sometimes gets skipped.

And part of it, honestly, is timing. The leadership question often gets pushed to the bottom of the diligence list and only gets real attention once the deal has closed and the clock is running. By then your options have narrowed and your leverage has gone.

The leader you buy with may not be the leader you exit with

Here is a nuance worth holding in mind.

The leader who creates value in the first half of a hold is not always the one who carries the business to exit. Early on, the work is integration and operational improvement. Tightening the plant. Stabilising the team. Getting the capability you paid for working inside the wider group.

Closer to exit, the work shifts. Now you need someone who can tell the growth story again, build the equity narrative, and stand in front of the next buyer with conviction.

Sometimes one leader spans both. Often they do not. The investors who handle this well think about it early, rather than discovering the gap eighteen months in. They are honest about what the business needs now and what it will need later, and they plan the leadership accordingly. That might mean a strong number two hired with the next phase already in view, or a chair who can bridge the change. What it should not mean is realising too late that the person who fixed the plant is not the person who can sell it.

The questions I would ask before signing

If your thesis rests on capacity and capability, not brand equity, a few questions belong on the table during diligence. Not after completion.

Who actually holds the technical knowledge here, and what happens if they leave?

In specialty ingredients, the value often sits with a handful of formulators and process engineers. Lose two of them and you have bought less than you paid for. The retirement wave running through this sector makes that question sharper than it was even three years ago. A lot of deep process knowledge is held by people in the back half of their careers, and some of it is already halfway out of the door on its own. Ask who they are, what is keeping them, and what happens to the value of the asset if they go.

Does this team have integration experience, or only operating experience?

Running a site well and absorbing a site into a larger group are not the same job. The second one means systems, reporting lines, culture, and the quiet diplomacy of not trampling what already works. It is rarer. And harder to hire for.

Is the leader I am backing someone who builds value through people and process, rather than through narrative?

Both kinds of leader earn their place. Putting the wrong one on the wrong asset is how a strong thesis turns into a flat hold.

Where this leaves you

The move toward buying capability is good news for disciplined investors. Capacity and technical strength outlast brand heat. Competitors find them far harder to copy.

The catch is that this kind of asset punishes a lazy hire faster than a brand ever would. The value is tied up in people and processes that the wrong leader can damage in months. And the leaders who can run these businesses well are in short supply, which means you are competing for them, not picking from a queue.

I spend most of my days helping investors and food businesses get this match right, so I will own my bias about how much it matters. But the pattern holds. The firms turning these deals into real returns treat the leadership appointment as part of the thesis. Not a loose end to tidy up once the ink is dry.

So if you are weighing an acquisition this year, and the value sits in the plant rather than the packaging, have the conversation about who runs it before you complete.

Not after.

That is usually the conversation that decides whether the whole thing pays off.

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This is part of my Behind the Scenes series, where I share what I am picking up from conversations with the leaders, founders, and investors shaping the future of food. If something here landed, I would like to hear how it looks from your seat.

Mike Meyrick is Founder and CEO of Meyrick Consulting, an international executive search firm operating across the food and food ingredients sector.