« October 2011 Table of Contents
Editor's Note: A healthy opportunity
October 01, 2011
As the economy slowed to a crawl over the past few years I began to wonder if the amount of mergers and acquisitions in the seafood industry would do the same. Many investors look at a down economy as a ripe time to gobble up small companies. So I asked Contributing Editor Steve Coomes to look into the topic, and he came back with this issue’s Top Story, New Hands on Deck. Faced with a barrage of negative news about the U.S. economy, I was happy to learn from this story that a variety of investors, both industry stakeholders and newcomers, continue to ply this diverse industry for opportunities.
However, financiers face several challenges when considering a seafood company: Many are private, family-owned businesses that are typically reluctant to divulge financial information, which can slow or even prevent a potential sale. In addition, much of the supply is based on wild harvests that can change according to the whims of Mother Nature, as well as fall victim to maladies like oils spills, burdensome government regulation and other elements that make investors squeamish.
Putting challenges aside, one has to consider how extremely fragmented this industry is to realize that challenges, in turn, breed opportunity. Every week I come across a new seafood business that I’m unfamiliar with. The seafood industry has hundreds of commercially available species sold by thousands of independent suppliers nationwide, which in turn supply thousands of independent restaurants and retailers. Pick a seafood species and there are probably a handful of regional operators that specialize in the product.
It seems the investment community is also diverse: I was surprised to learn that there are private-equity firms such as Mindful Investors that specialize in financing companies providing sustainable and healthy-living-focused products. Considering the important role that both elements have played in the seafood industry over the past few years, this is a timely twist to investment strategy that may help seafood companies gain needed capital in the future. To learn about this and other aspects of the investment climate, click here and read on.