|
In December, Insight Equity jumped head first into the nursery business by purchasing possibly the largest nursery grower in the country. Berry Family of Nurseries grows highly diversified crops on thousands of acres in Oklahoma, Michigan, Oregon, North Carolina, Florida and Tennessee. Nursery Management Publisher Todd Davis caught up with Senior Vice President Chris Zugaro to discuss why investment firm dove into the nursery business.
 Q: Tell me some of the due diligence you did before getting into the nursery industry.
A: Sure. We complete a very thorough due-diligence process leading into any transaction. Specifically with the Berry Family of Nurseries we looked into every aspect of the business: the company itself, its financials, management, operations, etc.
We spend a great deal of time on the strategic viability of a business and examine it through a broad market view: where the industry is going, the company’s position in the marketplace, what the company does well. It all came back very favorable.
Our thorough diligence process at times can, frankly, trip companies up. But in this case it revealed a very strong company in a very good market and everything checked out perfectly.
Q: The nursery industry is as down as it’s been in decades. Was that something you looked at regarding getting in at the right time?
A: We don’t really believe in trying to time the market, so we didn’t think about it in terms of, “The market is way down. We should invest now so that when the market recovers we’ll be in a much better situation.”
The way we think about it is this is a fundamentally strong market and Berry is a very strong company. The products are in demand by consumers. It may be at a cyclical low right now. There may be more decline to come, or there may be a very quick recovery.
We don’t to know exactly when it’s going to turn. Instead we looked at a very strong fundamental market and a business positioned very well in that market and said, “We are comfortable with where the company is and where it is going.”
Because these are products that will continue to be sold, the market will continue to exist. It’s not going away. There is no doubt the market is down, but good companies, like Berry, can thrive in this type of industry.
Q: Berry Family of Nurseries is diverse both geographically and in what it grows. Was that something you found attractive?
A: It was. What really attracted us to this company was its market leadership position and national footprint. We view these two things as very important. The national footprint is necessary to serve those customers that need the footprint: your Lowes, your Wal-Mart, your Home Depot.
But it allows the company to grow plants more efficiently and serve regional customers as well. We have the ability to provide plants in regions of the country that they may not be native and may not grow. Most importantly we have the ability to serve a variety of customers with the footprint.
Q: What about future plans? Any thoughts on changing markets, customers you serve or the products you grow?
A: That’s a great question. In the medium and long term we want to build a better, stronger nursery business at Berry. That definitely means growth.
On the customer side, we’re open to all options. We’d like to grow with our existing customers certainly, and we’d like to serve new customers as well, either regionally or nationally.
On the operations and plant mix side, we’re going to try to be very opportunistic. There are certain plants the company doesn’t grow that we may try. There are a lot of plants we buy in and we’re going to continue to do that.
We have great relationships with contract growers and people in the industry, and we plan on keeping that intact. We’re going improve the business we have and then decide if we need to do anything to turbo charge growth. But it’s really about focusing on the company and improving the business and relationships we have in place.
About Chris: Chris Zugaro is senior vice president, Insight Equity; (817) 488-7775; www.insightequity.com.
|
