If you are an entrepreneur with a small food or beverage company looking to take it to the next level, this article should be of particular interest to you. Your natural inclination may be to seek venture capital or private equity to fund your growth, but that might not be the best path for you to take. We have created a hybrid M&A model designed to bring the appropriate capital resources to you entrepreneurs. It allows the entrepreneur to bring in smart money and to maintain control.

We have taken the experiences of a beverage industry veteran, a food industry veteran and an investment banker and crafted a model that both large industry players and the small business owners are embracing.

I recently connected with two old college mates from the Wharton Business School. We are in what we like to call, the early autumn of our careers after pursuing quite different paths initially. John Blackington is a partner in Growth Partners, a consulting firm that advises food and beverage companies in all aspects of product introduction and market growth. You might say that it has been his life’s work with his initial introduction to the industry as a Coke Route driver during his college summer breaks.

After graduation, Coke hired John as a management trainee in the sales and marketing discipline. John grew his career at Coke and over the next 25 years held various positions in sales, marketing, and business development. John’s entrepreneurial spirit prevailed and he left Coke to consult with early stage food and beverage companies on new product introductions and strategic partnerships.

Steve Hasselbeck is now a food industry consultant after spending 27 years with the various companies that were rolled up into ConAgra. His experience was in managing products and channels. Steve is familiar with almost every functional area within a large food company. He has seen the introduction and the failed introduction of many food industry products.

John’s experience at Coke and Steve’s experience at ConAgra led them to the conclusion that new product introductions were most efficiently and cost effectively the purview of the smaller, nimble, low overhead company and not the food and beverage giants.

Dave Kauppi is now the president of MidMarket Capital, a M&A firm specializing in smaller technology based companies. Dave got the high tech bug early in his business life and pursued a career in high tech sales and marketing. Dave sold or managed in computer services, hardware, software, datacom, computer leasing and of course, a Dot Com. After several experiences of rapid accent followed by an even more rapid decent as technologies and markets changed, Dave decided to pursue an investment banking practice to help technology companies.

Dave, John, and Steve stayed in touch over the years and would share business ideas. In a recent discussion, John was describing the dynamics he saw with new product introductions in the food and beverage industry. He observed that most of the blockbuster products were the result of an entrepreneurial effort from an early stage company bootstrapping its growth in a very cost conscious lean environment.

The big companies, with all their seeming advantages experienced a high failure rate in new product introductions and the losses resulting from this art of capturing the fickle consumer were substantial. When we contacted Steve, he confirmed that this was also his experience. Don’t get us wrong. There were hundreds of failures from the start-ups as well. However, the failure for the edgy little start-up resulted in losses in the $1 – $5 million range. The same result from an industry giant was often in the $100 million to $250 million range.

For every Hansen Natural or Red Bull, there are literally hundreds of companies that either flame out or never reach a critical mass beyond a loyal local market. It seems like the mentality of these smaller business owners is, using the example of the popular TV show, Deal or No Deal, to hold out for the $1 million briefcase. What about that logical contestant that objectively weighs the facts and the odds and cashes out for $280,000?

As we discussed the dynamics of this market, we were drawn to a merger and acquisition model commonly used in the technology industry that we felt could also be applied to the food and beverage industry. Cisco Systems, the giant networking company, is a serial acquirer of companies. They do a tremendous amount of R&D and organic product development. They recognize, however, that they cannot possibly capture all the new developments in this rapidly changing field through internal development alone.

Cisco seeks out investments in promising, small, technology companies and this approach has been a key element in their market dominance. They bring what we refer to as smart money to the high tech entrepreneur. They purchase a minority stake in the early stage company with a call option on acquiring the remainder at a later date with an agreed-upon valuation multiple. This structure is a brilliantly elegant method to dramatically enhance the risk reward profile of new product introduction. Here is why:

For the Entrepreneur: (Just substitute in your food or beverage industry giant’s name that is in your category for Cisco below)

1.The involvement of Cisco – resources, market presence, brand, distribution capability is a self fulfilling prophecy to your product’s success.

2.For the same level of dilution that an entrepreneur would get from a VC, angel investor or private equity group, the entrepreneur gets the performance leverage of smart money. See #1.

3.The entrepreneur gets to grow his business with Cisco’s support at a far more rapid pace than he could alone. He is more likely to establish the critical mass needed for market leadership within his industry’s brief window of opportunity.

4.He gets an exit strategy with an established valuation metric while the buyer helps him make his exit much more lucrative.

5.As an old Wharton professor used to ask, What would you rather have, all of a grape or part of a watermelon? That sums it up pretty well. The involvement of Cisco gives the product a much better probability of growing significantly. The entrepreneur will own a meaningful portion of a far bigger asset.

For the Large Company Investor:

1.Create access to a large funnel of developing technology and products.

2.Creates a very nimble, market sensitive, product development or R&D arm.

3.Minor resource allocation to the autonomous operator during his skunk works market proving development stage.

4.Diversify their product development portfolio – because this approach provides for a relatively small investment in a greater number of opportunities fueled by the entrepreneurial spirit, they greatly improve the probability of creating a winner.

5.By investing early and getting an equity position in a small company and favorable valuation metrics on the call option, they pay a fraction of the market price to what they would have to pay if they acquired the company once the product had proven successful.

Dean Foods utilized this model successfully with their investment in White Wave, the producer of the market leading Silk Brand of organic Soy milk products. Dean Foods acquired a 25% equity stake in White Wave in 1999 for $4 million. While allowing this entrepreneurial firm to operate autonomously, they backed them with leverage and a modest level of capital resources. Sales exploded and Dean exercised their call option on the remaining 75% equity in White Way in 2004 for $224 million. Sales for White Way were projected to hit $420 million in 2005.

Given today’s valuation metrics for a company with White Way’s growth rate and profitability, their market cap is about $1.26 Billion, or 3 times trailing 12 months revenue. Dean invested $5million initially, gave them access to their leverage, and exercised their call option for $224 million. Their effective acquisition price totaling $229 million represents an 82% discount to White Wave’s 2005 market cap.

Dean Foods is reaping additional benefits. This acquisition was the catalyst for several additional investments in the specialty/gourmet end of the milk industry. These acquisitions have transformed Dean Foods from a low margin milk producer into a Wall Street standout with a growing stable of high margin, high growth brands.

Dean’s profits have tripled in four years and the stock price has doubled since 2000, far outpacing the food industry average. This success has triggered the aggressive introduction of new products and new channels of distribution. Not bad for a $5 million bet on a new product in 1999. Wait, let’s not forget about our entrepreneur. His total proceeds of $229 million are a fantastic 5- year result for a little company with 1999 sales of under $20 million.

MidMarket Capital has created this model combining the food and beverage industry experience with the investment banking experience to structure these successful transactions. MMC can either represent the small entrepreneurial firm looking for the smart money investment with the appropriate growth partner or the large industry player looking to enhance their new product strategy with this creative approach.

This model has successfully served the technology industry through periods of outstanding growth and market value creation. Many of the same dynamics are present in the food and beverage industry and these same transaction stru7ctures can be similarly employed to create value.

Overall Scientific Technical Medical publishing industry grew 4.4% to $14.7 billion in 2007 (Source: Simba). With the emergence of technology enabled business models, the publishing industry has witnessed intense competition, in recent years.

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Knowledgespeak is the first online STM news service to report on all the related developments within the scientific, technical and medical publishing industry, on a daily basis. Widely subscribed by people who matter most in the STM publishing industry, this STM news service has become the benchmark for online scientific and medical news.

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Almost every industry will be in search of a suitable vendor for plaster builders rubble bags, because waste by-products for, every industry, is too bulky, to fit into thin plastic bags, even if they are large in size. If industries are not able to manage waste appropriately, they may be fined or are liable under law, and earn bad reputation as a result. An industry would not risk, being marked with bad reputation, at any cost.

Any industry, which has earned its name with its clients, will want to retain its crown of being best host and a responsible host, and hence, makes sure that waste management is up to the mark. If it is a start up industry, then it would not risk earning, a bad name and go down, as soon as it began its business. This is why, every attention is paid to have enough stock of plaster builders rubble bags for handling waste easily, by a start up industry.

An industry owner, of current times, is clever, in that he or she ensures that good amount of research is done before choosing any vendor or dealer for their raw materials, tools or waste management or plaster builders rubble bags, and maximize on profits without compromising on quality. Even a small aspect like choosing a vendor for plaster builders rubble bags is given deep search and study, for cheap deals available. Teams are constituted for this study and results are reported in a systematic manner.

Industry is a huge organization, and for its smooth running, needs are also huge, making it necessary for choosing a dealer who is able to provide constant supply of raw materials, tools and all other accessories required. Although plaster builders rubble bags are small things, efficient industry owners are always keeping an eye on, minute aspects as these.

Industries that are into food processing or clothing, construction, or refinery, will always, produce waste in bulk. Shifting raw materials or waste from an industry or simply packaging material, that needs heavy duty bags, will always need plaster builders rubble bags.

Hence an industry will be buying bulk orders regularly from a chosen vendor dealing in rubble bags. There are many vendors online, who are ready to offer bulk orders at very low prices, finding the appropriate one, needs, only small amount of research.

For finding right kind of vendors, one may use, classified websites online, and contact them for further quotes. Or, simply search online for, cheap plaster builders rubble bags, to find many web links to vendor websites. But, checking the vendor’s authenticity by visiting the manufacturer or dealer in person is also good practice, because once a reliable vendor is found, all they have to do is, finish paper work, for contract based supply or choose an appropriate method of supply and pay, that is suitable to both parties.

It is always good to choose plaster builders rubble bags made from polymers(recycled), for they can be recycled again. It is easier to manage waste along with being environment friendly. To do so, choosing the right material is very important.

The auto transport industry gives a lot of job opportunities with a good career projection. These jobs are also available on both basis as a full time and part time. People in search of auto transport jobs should have qualities like devoted, loyal, motivated and hard-working. Career prospects in auto shipping industry are positive even for those who step in for the first time in this industry.

There are various types of Vehicle transport jobs available like Auto-Mover truck driver, Vehicle Shipping dispatcher, Customer service representative, Driver Car Hauler, CDL Driver, Military Vehicle Shipping job, owning your Own Truck Fleet, Intermediate Auto Mechanic etc.

You can find different jobs through classified advertising, from car dealers, and bidding sites. Consumers may demand for shippers who specialize in race cars, traditional and collectible cars, or loads with many vehicles. Persons moving often are in need of an auto transporter.

The first auto transport job that comes to mind is truck driver. The work of truck driver is difficult when compared to than any other driver because in this case the driver has to deliver the vehicle and also has to load and unload it. Another difficulty is they have to pick up vehicles from 10 to 12 places and deliver to different states which take few weeks to deliver. This is a hard job for drivers who are married but they are paid a good amount.

Another auto shipping job is that of dispatcher. A Vehicle transport dispatcher is the “travel agent” of the auto transport industry. The dispatcher takes orders for shipment of customer vehicles and plans it with the trucking company. This work is harder than taught because each customer is shipping from somewhere like Melbourne, for example to Bangkok, So this has to be planned with a truck that has 8 to 11 autos which goes on that route. The dispatcher has to communicate information about pick-up, delivery, and transportation times to and from the truck driver and the customer.

Another type of work is that of client service representative. The client service representative is the person that the take delivery of and sends out quotation marks to consumers via phone or email. The client service representative also takes the order from the buyer and sends it to the dispatch dept. The client service representative also answers questions from customers about the shipping procedure itself because most customers have never shipped a car and knows nothing about it.

Diesel Mechanic work is the most critical profession in the car transport industry. This work is given much of significance because a Diesel Mechanic is very necessary for the any auto transport company. His job involves performing usual protection of the company vehicles to ensure that the company trucks move safe and sound on the road. The requirement of Diesel Mechanics is always high in the auto transport industry.

Auto Processor job includes processing of cars from one end to another end. General Warehouse job includes usage of forklift to transport overstock freight to main locations. Driver Car Hauler job includes transfer of cars and other items to different places. Certified courses are available.

In late May, the Santa Clara County, Calif. District Attorneys Office charged a former escrow officer with 32 counts of embezzlement and grand theft for allegedly living high on the hog on the tab of her clients.

Melanie Melim, a former escrow officer with Alliance Title Co., faces up to 21 years in prison for allegedly stealing more than $1 million from client escrow accounts funds that were considered to be guarded by a neutral third-party to the real estate transaction.

Instead, Melim used the funds to attend concerts and sporting events, take trips to Las Vegas and go on shopping sprees, authorities alleged.

As much as the allegations against Melim are personally troublesome, they also raise questions about the security of the escrow industry, a staple of the real estate business in California for more than a century.

But as the California escrow industry juggles confronting incidents such as these, waiting for the filing of a controversial rulemaking that would drastically cut its rates and pacing the floor of the state Capitol, one trade group has hinted that the industry may be gearing up for its toughest challenge yet.

An aligning of the stars
Members of the Escrow Institute of California (EIC), a trade group that represents the states licensed, independent escrow industry, are laying the groundwork for a cross-industry meeting of the minds to bring stability to an industry confounded by a confusing maze of uneven regulatory oversight.

The EIC has officially opened the door for formal discussion of a proposal to bring Californias escrow practitioners who, depending on their primary real estate business, must answer to one of five different state regulators under the umbrella of a comprehensive, uniform escrow law with a single regulator.

According to EIC President P.J. Garcia, its a system that could do much to solve the escrow industrys problems and relieve it of the burden of a regulatory structure that just doesnt make sense.

There is a broad array of bureaucracries that regulate escrow in California, to the extent that not even the regulators have an integral grasp of the picture, Garcia said. If that is the case, how can the consumer possibly understand it and know who to turn to? Its a question of enhancing consumer protection and streamlining government, both of which we think are good goals.

However, its an idea that has been tossed around before, without much agreement. Still, Garcia describes initial discussions among the various affected industries and regulators as encouraging.

Theres the sense that there is an aligning of the stars, she said. But the devil is in the details. What we have to do is build a consensus.

In the beginning
Independent escrow corporations have been providing closing services to California consumers in California since the late 1940s. The state Escrow Law, which was enacted in 1947, defines escrow providers as neutral, third-party agents for all principals in a real estate transaction.

The Escrow Law requires all corporations engaged in the escrow business as escrow agents to be licensed as independent escrow companies by the California Department of Corporations (DOC). However, in order to reach Californias more rural consumers, the state began to allow other real estate practitioners to provide escrow services to give consumers greater flexibility.

Thus, the state excluded the following groups from the licensure requirements of the Escrow Law:

Any person whose principal business is that of preparing abstracts or making searches of title that are used as a basis for the issuance of a policy of title insurance by a company doing business under any law of this state relating to insurance companies. These individuals are regulated by the Department of Insurance (DOI).

Any real estate broker licensed by the real estate commissioner while performing acts in the course of or incidental to a real estate transaction in which the broker is an agent or a party to the transaction and in which the broker is performing an act for which a real estate license is required. These individuals are regulated by the Department of Real Estate (DRE).

Any person doing business relating to banks, trust companies, building and loan or savings and loan associations. These individuals are regulated by either the DOC or the DRE.

Any person licensed to practice law in California who has a bona fide client attorney relationship with a principal in a real estate transaction and who is not actively engaged in the business of an escrow agent. These individuals are regulated by the state bar.
Garcia argued that while the current regulatory structure may have made sense when it was created, times have changed, and so should the system.

I think the market has changed over the last 60 years or so, particularly in the last 10 or 15 years, she said. Technology has made a lot of changes. Were no longer a predominantly rural state. Even the rural areas arent just rural anymore.

Moreover, escrow practitioners licensed by the DOC are subject to a higher regulatory standard than those who are exempt from the Escrow Law, Garcia said. DOC licensees undergo background checks and fingerprinting by the Department of Justice and are bonded by the Escrow Agents Fidelity Corp., while those who are exempt from the Escrow Law get the all-clear from their primary industry regulator.

Such uneven standards may be a factor contributing to incidents such as the one involving Melim, Garcia said.

Whenever something is reported, it is just reported as escrow. There is no distinction made as to who the regulator is, Garcia said. We all sort of get painted with the same broad brush, and that is not something we have been happy about.

Mike Belote, legislative advocate for the California Escrow Association (CEA), a trade group representing all escrow practitioners, agreed change is needed, but said the discussion has been simmering for 25 years without coming to a boiling point.

We think if you were creating an escrow regulation system from scratch, you wouldnt do it this way, Belote said. Everyone understands its a weird system we have now, but its been this way for over 50 years. The question is, how do you conform all of that if there is no political will to do that?

Winds of change
Its no secret that for more than a year, the DOI has been focused on implementing regulations to drastically reduce title insurance premiums and escrow rates by $1 billion annually. The DOI has been colorful in its depiction of the title insurance industry as a system rife with illegal kickbacks and gratuities, and the department was generous enough with its brush to paint the escrow industry as middlemen who only further drive up prices for consumers.

This included DOC licensees, who were baffled that they were lumped into a regulation proposed by a regulatory authority other than their own. The EIC spent most of last year fighting the proposal and standing beside the group was the California Land Title Association (CLTA), which linked arms with the EIC on many occasions, including a contentious day-long DOI hearing last August.

Bridges built and alliances formed, the EIC is hopeful it will be able to bring the CLTA, the California Association of Mortgage Brokers (CAMB) and the California Association of Realtors (CAR) together to hash out a proposal in time to introduce legislation in the 2008 session. While details are still sketchy at this point, Garcia said one suggestion is to bring all escrow providers under the DOCs jurisdiction.

Logistically speaking, all of the people who know escrow best are at the Department of Corporations, Garcia said. But again, the devils in the details. I couldnt give any commitment on how that might look in the end. Of course, it will have to be done collaboratively because if the other industries are flat-out opposed to it, it would obviously be a lot more difficult to do.

Craig Page, executive vice president and counsel of the CLTA, and Jack Williams, president of CAMBs executive board, both said their groups are open to the discussion, but as pen hasnt yet been put to paper, they declined to state formal opinions on the proposal. Garcia said the DOC and DOI have also been receptive to initial talks.

CAR and the DRE, which historically have been the most resistant to the idea, did not respond to a request for comment by press time.

The process of going through the Department of Insurance hearings really brought home to us once again that this is a very fractionated and confusing process, Garcia said. 2007 is paving the way. Were pleasantly surprised by the response we have received so far.