M&A: Piecing Together a Natural-Foods Empire

Deal guru Irwin Simon, founder and CEO of Hain Celestial, knows how to make mergers work.

Art of the DealMany of Simon’s deals have been for small companies that seemed to hit invisible ceilings, then got energized within Hain’s global sales and distribution channels. A key part of Simon’s deal-making acumen is his ability to see M&A as a two-way street. Not only does he plug new acquisitions into his global network, but he absorbs the networks he’s just acquired and works those channels.

Buying Celestial Seasonings brought a transformative network of supermarkets and large grocery stores, vastly expanding what had been largely specialty channels. Buying Sensible Portions in 2010 brought a distribution deal with Costco and with that entry into the huge club channel. A series of deals in between have brought access to channels like Whole Foods, Walmart and—gasp!—7-Eleven. While best known for not-exactly-healthy products like slushies and beef jerkies, c-stores have been quietly stocking healthier snacks, bowing to consumer demand. Once again, Simon is pacing the trend curve.

Years ago, Simon feared his portfolio of organic grains and preservative-free snacks would stereotype him as a tree-hugging health-food nut driven by causes rather than spreadsheets. Evidently, that’s hardly the case; the man loves his occasional steak too much to fit anyone’s crunchy-granola stereotype. Nevertheless Simon has probably done more to bring better-for-you foods into the mainstream than anyone else.

“Deals don’t work if you chase them and overpay. You’ve got to have a good strategic plan.”

As for deal valuation, Simon genially waves off questions about preferred multiples and p/e ratios. In the past he’s mentioned “six or seven times EBIDTA” as his sweet spot. Today, with several deals possibly in the works, he stays mum.

“Deals don’t work if you chase them and overpay,” he declares. “You’ve got to have a good strategic plan, have good people responsible for the deal and be realistic in your numbers.”

Taking a philosophical turn, Simon drew a comparison between deals and marriage. “In both, you have to have the right partner and you have to come into the marriage with similar expectations,” he says. Making a deal solely to buy growth or earnings is like choosing a marriage partner solely on expectation of a dowry. “You don’t want to be pushing a square peg into a
round hole,” he notes.

As with marriage, when doing deals you better be prepared for stormy weather as well as blue skies. “Shit happens,” Simon shrugs. “You can work the numbers right but still, shit happens. The question is: What are you going to do about it?”


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