Healthy eating

What was the deal?

We were lead adviser on the sale of Creed Catering Supplies to UK food distribution group Kitwave for an initial £61m, with an up to £10m two-year earn-out. The deal completed in October 2024. Based in Cheltenham, Creed is an independent food wholesaler founded more than 50 years ago.

How were you introduced to the deal?

Creed was a second-generation family-owned business, managed by the patriarch, Chris Creed, on behalf of shareholders. Chris and the management team joined one of our ‘High Growth High Performance’ workshops in Birmingham, with professionals from our management consulting, tax, financial planning and M&A teams, to understand both corporate and personal objectives.

Although the business had seen strong growth over the previous five years, capacity had become its biggest challenge. While securing investment would have been relatively straightforward – it was a phenomenally well-run business – that route would have meant committing to another three-to-five-year investment cycle. Instead, the decision was made to sell. We were invited to tender for the sale mandate at the end of 2023 and entered the process with a head start, thanks to our established relationship with the senior leadership team, our proven expertise in the sector, experience working with owner-managed businesses, and international reach.

What was the process?

The family didn’t want a broad process, so we worked with them to narrow 50 potential acquirers down to a shortlist of 10 – some private equity, some trade buyers and all with the financial acumen to do the transaction.

From the outset there was genuine conviction that it wasn’t just about finding any old buyer, but the right buyer. The business had worked unbelievably hard on their culture, from the delivery drivers right the way through to the CEO. With our private equity team helping to screen the private equity offers, we whittled the list down to three potential buyers – two trade and one private equity – and released the vendor due diligence report.

Who were the advisers?

We were lead financial adviser to Creed shareholders, which entailed a full auction process, offer negotiation, and negotiating net debt and normalised working capital adjustments. We also provided SPA, tax (corporate and private client) and management consulting advice through our financial planning team. Creed took legal advice from BPE’s corporate team. Deloitte provided the vendor due diligence and KPMG carried out due diligence for Kitwave, who used Muckle as legal advisers.

What were the challenges?

One of the key challenges was about people – aligning the senior leadership team’s thinking with the ideology of the buyer. Chemistry gets overlooked, but it’s often the most important thing in most deals. Creed had to go from being a standalone business to being part of Kitwave’s food service division – a deal that required adaptability and experience. You don’t learn how to deal with that in textbooks.

We brought in technical experts for help on lease accounting, and our SPA advisory team advised on completion accounts, lockbox mechanisms and earn-out accounting. The SPA can sometimes fall into a grey area – our team is experienced at providing a bridge between the SPA’s accounting requirements and legal drafting.

Were any lessons learnt for future deals?

Having the confidence that you have the right people around you, and working in a collaborative way delivers good results. We try to bring in as many eyes and ears around a deal as we can, so we can second-guess the challenges we might face and be on the front foot to find solutions.