Over the last 10 years, private equity investment activity in the pet food and treats sector has increased substantially, particularly in the middle market. According to industry specialists, consumable pet products are commanding double-digit EBITDA multiples and 20 to 30 percent more than hard goods such as pet toys and bedding. However, as private equity investors increase their activity, the risk profile of these investments may also rise. Pet food and treats come with unique compliance and regulatory requirements not encountered in traditional manufacturing and distribution environments, particularly those associated with food safety.
Food Safety Due Diligence
When investing in pet food, not unlike investing in human food, conducting food safety due diligence is critical. In the fall of 2015, the Food and Drug Administration published two final rules as part of its implementation of the Food Safety Modernization Act, or FSMA; the first outlines enhanced controls for human food, and the second establishes safety controls for animal food. Investors should be aware of the regulatory environment when considering investments in the sector.
In addition to conducting a Quality of Operations due diligence-type assessment, food safety experts recommend administering an independent review of the target company’s food safety and compliance programs to ensure adherence to internal programs, assess management’s commitment to food safety and compliance, and verify the implementation of industry best practices. […]
As director of food, beverage and consumables, Jennifer Frankenberg brings TriVista clients a strong combination of food safety, supply chain, operations and risk management experience in the food and consumables space. Her expertise ranges from collaborating with regulatory agencies on issues such as recall activities and foodborne illness investigations to performing plant inspections.