Philanthropy Blog: New Yorkers for Children

The Sun Capital Partners Foundation supports a number of organization in South Florida because it is important to make sure our contributions support the local community. However, neither Sun nor I limit our vision to our home region. New York City is also very near and dear to my heart. Sun Capital has an office in midtown and my family spends a great deal of time in the tri-state area, and I personally support a number of New York-based organizations.

Image Source: newyorkersforchildren.org

One I proudly support is New Yorkers for Children (NYFC), a non-profit dedicated to improving the lives of youth currently in or aging out of foster care. It is NYFC’s mission to reach fostered youth in New York City and empower them to achieve their ambitions. In partnership with the Administration of Children’s Services (ACS), NYFC improves the well-being of children in foster care through education, career development, and the acquisition of life skills. They also advocate for strengthening the child welfare system.

Of the more than 11,000 children currently in foster care in New York City, 40% are 12 years old or above. This age group is particularly at risk as they will soon be transitioning out of the child welfare system. Since 1996, NYFC has distributed more than $50 million of support for youth in foster care in the form of meaningful programs, college scholarships, tutoring, job training, and networking opportunities. Each year they positively impact lives of more than 1,000 children and young adults through signature programs such as the Back-to-School Package Program, the Spirit Award, the Guardian Scholars Program, the YOUTH CAN! program, and the Youth Advisory Board.

Image source: newyorksocialdiary.com

I am proud to support NYFC through activities such as the Support-A-Scholar Celebration, which recently held its fourth annual celebration. The fundraiser presented attendees with a fund-a-scholar opportunity that covers the annual cost of one breakthrough student.

I was also happy to support the NYFC by attending the Annual Fall Gala. This year marks the NYFC’s 20th anniversary and the milestone gala celebration honored the great work done over the past two decades, and raised more than $1.3 million for youth in foster care. It is an honor to support NYFC and the youth in foster care, alongside so many of the city’s most philanthropic individuals and hard-working organizations that positively impact the lives of children in need in the New York City area.

Bracing for Hurricane Matthew

We are in full preparation mode as we brace our families, homes, and the Sun Capital Partners headquarters for the potential landfall of Hurricane Matthew over the next few days. With dangerous weather approaching, we are taking all the necessary steps to ensure the safety of our team and their families including the initiation of disaster recovery procedures and business continuity plans. While we batten down the hatches at work and make arrangements to cope with the weather, I am more grateful than ever for the organizations that help those less fortunate in our communities during such weather and natural disasters.

The Sun Capital Partners Foundation is a proud supporter of organizations that offer invaluable aid to families and children in times of need. These caring people not only offer assistance during weather emergencies, but also provide daily support for victims of domestic abuse, neglect, homelessness and poverty. One such organization we support is HANDY, whose ethos is Helping Abused Neglected Disadvantage Youth. 

Especially in Florida, where weather-related emergencies are not unusual, HANDY is a critical helping hand for displaced and at-risk young people in the community. This award-winning non-profit offers an expansive list of programs to help children and young people who have been removed from their homes because of domestic violence, substance abuse, physical and/or sexual abuse, or abandonment. The team at HANDY has played an instrumental role in keeping many children safe during disasters, natural or otherwise. 

This year the Sun Capital Partners Foundation has donated $100,000 to HANDY to advance their mission and capacity to help others. Just as HANDY supported displaced youth following the earthquake in Haiti not so long ago, we are sure to see this organization and other charitable institutions like it hard at work and lending a hand in relief efforts, should Hurricane Matthew hit our communities. Unfortunately, it is times like these that illustrate the vital importance of organizations like HANDY to the youth in our community. I am thankful for the staff and volunteers at HANDY, and grateful to have played a small part in helping them reach more children in need.

Philanthropy - YMCA Of South Palm Beach County 9-29-16

Many people think of “The Y” as a place for family recreation and fitness. The truth is that the YMCA offers a very wide range of community-minded programs that promote healthy living and embed the ideals of social responsibility. This commitment is demonstrated by the fact that the YMCA allows all community members to participate in membership programs regardless of their ability to pay fees. These are just some of the reasons that the Sun Capital Foundation is pleased to have been a supporter of the YMCA of South Palm Beach County.

The YMCA of South Palm Beach County is ranked in the top quartile of all YMCAs in the country, and serves more than 70,000 area residents. The organization stands out due to several strategic initiatives, including: Drowning Prevention, the Y Diabetes Prevention Program (DPP), and its Healthy Eating Physical Activity (HEPA) guidelines and Education Enrichment. The South Palm Beach Y also provides approximately $1 million in scholarship assistance each year!

Among all of these programs, the drowning prevention program deserves special mention. This is not an issue that gets much notice unless tragedy strikes, but The YMCA of South Palm Beach County recognized that it deserves ongoing attention, especially in a state like Florida where ocean and lake activities make up such a huge part of people’s daily lives and the economy. The organization was selected as a winner for its WaterSmart community initiative designed to reduce the number of death caused by drownings in the region, and received a grant from Impact 100 to continue its work.

As the summer winds down, the Y is finishing its busiest season, hosting Summer Camp for kids from age 5 through teenagers. Activities range from surfing and skating to field trips to the zoo, the science museum and local parks. For many area parents, having a resource like the Y to ensure their kids have a safe, educational and fun summer is a real lifesaver.

Our portfolio at Sun Capital partners is made up of a diverse group of companies across the consumer products and services, food and beverages, industrial, packaging, chemicals, building products, automotive, restaurants and retail sectors. One of the reasons I enjoy private equity investing is the wide variety of companies I get to work with. The many industries in which we operate, continuously create opportunities to make on new challenges and tackle previously uncharted waters.

Every relationship we have with a portfolio company is unique. Take Friendly's for example. Friendly's, known for its sandwiches, signature ice cream desserts, and the family friendly environment in their standalone restaurants, also distributed its branded ice cream through more than 4,000 super market and retail locations.

Friendly's has a great history in the Northeast and is loved by generation of families. recently, Massachusetts Governor Charlie Baker paid a visit to our Wilbraham, Mass. Facility where he met with the CEO John Maguire and sampled the ice cream.

LINK: http:www.masslive.com/news/index.ssf/2016/06/gov_charlie_baker_welcomed_to.htm

We have been involved with Friendly's for nearly a decade, and have played a number of key roles to help Friendly's overcome challenges. Over the past five years, we have worked closely with management's effort to expand distribution of the Friendly's ice cream into key leading retailers. This strategic move ultimately led to a sales increase of more than 100%, and made the Friendly's ice cream business attractive for buyers. In June, Dean Foods Co., finalized their purchase of the Friendly's ice cream manufacturing and retail distribution business.

The conclusion of the successful sale of the ice cream distribution portion of the Friendly's brand means continued growth of the Friendly's ice cream brand while we focus on the operations of more than 260 Friendly's restaurants. This is an exciting opportunity to continue growing in new existing markets.

Finding worthwhile investment opportunities

It’s no secret that remarkably high valuations are having an impact on the private markets. An excessively frothy environment such as this increases the risk of overpaying for assets. As investors, we want to actively invest, so restraint doesn’t come naturally. However, with discipline and a little bit of ingenuity, it’s still possible to find worthwhile investment opportunities.

One way to make the most of the current climate is to shift emphasis from platform investments to strategic add-ons. These add-ons can deliver outsize value to their platforms because of complementary products and operational synergies. So far this year, our affiliated portfolio companies have already completed six add-on acquisitions. We’re just excited as our portfolio company CEOs are to see the old axiom “the whole is greater than the sum of its parts” be realized.

Additionally, a corporate carve-out, where a company divests a business unit that is no longer core to its future strategy, can be a good opportunity for investors who understand their complexities. We continue to see carve-out opportunities in this environment, as corporations redirect resources to focus on growing their core business. Of course, these types of transactions can present unique and wideranging complexities. But for investors with the right experience, they can be mutually beneficial for the buyer and seller alike. At Sun Capital Partners, we’ve successfully transitioned more than 50 corporate carve-outs into independent businesses- growing their collective EBITDA by more than 220% from the time of acquisition.

Today’s high valuation market can certainly test an investor’s nerves, but with the right mix of discipline and ingenuity, good companies can still be found at a fair price. When executed well, both add-ons and carve-outs can build value in the portfolio, which is critical during a low-growth economic cycle when investors need to “create their own tailwind.”

Marc J. Leder, based in Boca Raton, Florida, is the co-chief executive officer of Sun Capital Partners, Inc. For more on his work, follow this Twitter page.

Business Perspectives

Last week, the data analysts at Pitchbook published some interesting dealmaking observations about the B2C sector. They noted the significant, yet relatively steady role private equity firms have played in retail, particularly over the last five years. In that time, the publication credited the investment firm I am Co-CEO of Sun Capital Partners, as one of the most active dealmakers.

Certainly, from our perspective, B2C businesses have proven attractive. It’s a sector that has traditionally responded very well to deep operationally-focused firms, like ours. However the Pitchbook data suggests that steady trend may be slowing this year, with completed private equity transactions behind the normal pace.

Some may wonder whether B2C appetites have changed. From my perspective, it’s not a reflection on the health of the sector, per se, but rather due to high market valuations. The same can probably be written for any number of sectors at the moment. Just because a firm has the operational expertise that could be additive to growing a business, doesn’t mean it’s a wise investment. When we and the seller can agree on the right valuation and price, today, like always, we are prepared to move forward quickly to close the transaction. In fact, our affiliates have completed four B2C business acquisitions so far this year; the most recent being a Midwest based convenience store chain.

Since our founding, affiliates of Sun Capital have completed approximately 100 retail and restaurant transactions, including ten convenience store acquisitions. Businesses such as these play to our operational strengths. Our firm has strong expertise in the convenience store and retail sectors through a number of past and current affiliated portfolio companies. And despite the current trend data showing that B2C investment may have begun a dip downward, this is a sector that we’ll continue to look at.

Marc J. Leder, Co-Chief Executive Officer of Sun Capital Partners, Inc., has been engaged in leveraged buyouts, investment banking, and business operations for more than 25 years. Learn more about him and his work here.