3 Ways This New Family Office Is Finding Deals

Andy Miller is the managing director at Ouabache Investments, a family office created by the family that owns Weaver Popcorn, the world’s largest popcorn company. Ouabache was founded in late 2017 to focus on direct investments in food, beverage, and agriculture companies. As Ouabache gets ready to close on its first deal, we talked to Andy about the firm’s strategy and the opportunities and challenges of sourcing deals in the lower middle market.

What types of companies are you targeting?

We’re very focused on food, beverage, and agriculture. Most people don’t realize that Weaver Popcorn is an agricultural company. We do all of our own hybrid research, we grow all the seed that goes in the ground to generate the popcorn plant, we contract with the farmers to grow the popcorn, and we process it. So in addition to food and bev, we understand the agriculture space very well. There’s a tremendous amount of innovation happening in the ag sector. We’re getting ready to close on a deal right now with a traditional ag company that has a market niche that’s just exploding.

We are looking at deals in the Midwest primarily, but the fit and opportunity for growth is much more important than the geography. We’ll look at companies when they have an international presence, but nothing that’s headquartered outside the U.S.  

We’re interested in majority or minority positions as well as outright acquisitions.

What deal size are you looking for?

Ideally it would be a company in the $4 to $7 million EBITDA range. We have seen that companies in this size range usually have sizable upside potential, which makes for stronger returns, particularly if there is a premium valuation.

How are you differentiating yourself in the market?

No matter what type of investment we make — even a minority investment — we want to play a very active and hands-on role. We want to leverage Weaver’s key strengths. As I mentioned, we’re really strong in agriculture and food manufacturing. We’re not necessarily a marketing company, but we’re a really strong sales and logistics company. As we look at an investment, we’re always asking whether we can add value in one of those buckets.

One of our advantages is that we’re able to tap into the resources from the popcorn company. While we are physically and legally separate entities, we have strong R&D, finance, and operations teams that can help us really evaluate these deals.

We’re looking at a deal right now that we found on Axial where the synergy would be on both international logistics as well as sales. For a deal to be a good fit, we want to make sure that the current ownership recognizes that our playing an active role is going to be beneficial for their company.

Ouabache was formed in late 2017. How did your first year go?

Our number one concern when we got started was finding deals in the space at the size we’re targeting. At Weaver, we worked with a ton of investment banks that would not have entertained a three or four or seven million dollar EBITDA deal. So we were really starting from scratch.

We had a multi-pronged approach. First, we reached out to a lot of our friends locally who play in the private equity space, on deals about our size. That was partly to get an education in how they approach deals, but also to ask for their assistance in passing along deals that may be a good fit with us but not necessarily their funds. 

Second, I cold-called investment banks that are aligned with our criteria, and that’s been helpful. 

Third, we joined Axial in May, which has been very beneficial as well, particularly through the events. Concord and the family office events have netted a lot of good new relationships and potential deals.