Since 1955, Italian Home Bakery has been an active and
highly-respected member of the Toronto baking community. In 1999,
the business was acquired by two brothers, Dennis Rossetti and John
Rossetti. Dennis was Italian Home Bakery's co-CEO and COO, and
John was the company's co-CEO and CFO.
In the beginning, Italian Home Bakery was in the fresh bakery
business, primarily supplying artisanal breads to major retailers
including Loblaws, Sobeys and Metro. About a decade ago, however;
the retailers shifted from selling daily fresh product to frozen
product. In order to remain relevant and competitive, Italian Home
Bakery had to adapt by developing a new frozen baked goods line.
That's when Dennis' bakery experience came into play. He
developed a frozen, thaw-and-serve or quick-to-refresh program. The
products developed were fully baked and frozen. Retailers have the
option of keeping the product frozen or refreshing it – which
means baking it in an oven for five minutes, and it would be ready
The new products were a success. In 2011, the Rossetti brothers
realized in order to expand, they needed to secure capital. There
was interest from private equity firms, however, the firms did not
share the brothers' vision for the future of the company. The
private equity firms were looking for rapid growth/rapid exit.
In 2015, the brothers found their strategic buyer in Grupo
Bimbo, a Mexican multinational bakery product manufacturing
company. Grupo Bimbo had recently purchased Canada Bread and an
artisan bread manufacturing plant in California, and was looking
for a similar artisan bread plant in the north-east to service the
New York, Massachusetts, Quebec and Ontario markets. Talks began in
April 2015 and a final agreement was concluded in July 2015, a
relatively short time frame for completing an acquisition.
John claimed the actual search for a strategic buyer began long
before 2015. He explains: "This process started back in 2011
when we realized we needed to expand through acquisition or by
selling to a strategic buyer. You have to be ready early on in the
process. It is critical that your financial records and forecasting
processes are in order. The company's cash position has to be
monitored regularly and internal controls have to be in place. The
quality and tenure of the management team is also very important.
Your production facility must operate efficiently, and you need
excellent relationships with a solid base of customers to establish
continuity of business."
John credits their success in finding a strategic buyer for
their business to adhering to a well-defined business plan, and
then moving through all the appropriate phases of the plan. He says
they were supported by a strong team, particularly Italian Home
Bakery's comptroller, who was involved every step of the way.
From the beginning, the brothers brought in advisors to ensure
their vision for the company was unified. John explains: "From
a long-term planning perspective, it was important that our
decisions were based on strategic initiatives rather than
operational efficiencies. We retained a consultant to coach us in
addressing the strategic direction of the business and implementing
John says it all comes down to being honest with yourself.
"The most important thing is documenting your strategic plan
in terms of where you see your company in two to three years. And
be honest with yourself to say you are capable of bringing your
company there. If you and your team are not capable of this, then
you must make a decision. That's the toughest part. You have to
be in that frame of mind to say: I'm ready for the next
John says any business should always be prepared for sale.
"That phrase is commonly used, but misunderstood. When I say
to an entrepreneur you have to get your company ready for sale, the
entrepreneur says: "My company is not for sale." I say,
your company has to be for sale at all times. You're either
creating value for a potential buyer or you're creating value
for your own company. And if you're not doing this, then
you're not operating a successful business."
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