Sunday is Easter. On that day millions of children, of all ages, will be exploring their Easter baskets looking for Peeps (https://www.peepsbrand.com/). Peeps, like Oreos, M&M’s, and Skittles, are products with incredible name recognition, a loyal customer base, and memory generating properties that extend across generations, lasting a lifetime.
As an advocate for small business entrepreneurship and fan of stories about pursuit of the American Dream by first generation immigrants to this nation and multiple generation family enterprises who recognize and take advantage of the limitless ladder of opportunity that exists for all equally in the United States, I am delighted to share the origin story for Peeps.
The story starts in 1923, when Samuel Born, a Russian immigrant, opened a candy company to make French style chocolates in Brooklyn, New York. Experiencing success, the company purchased an empty printing plant in Bethlehem, Pennsylvania and relocated in 1932. Continuing to grow, Just Born, Inc. acquired the Rodda Candy Company in 1953, primarily to add their popular jellybean product line. Another confectionary item recipe purchased at the same time was a marshmallow treat known as Peeps, a product they identified as having potential for growth. A popular product with customers, Peeps production was a time-consuming process taking approximately 27 hours from start to finish including a stage where employees hand squeezed the candy out of pastry tubes. The good news for the company and American enthusiasts for the product is that Samuel’s son, Bob Born, was born with superior intelligence and an inquisitive mind. Bob skipped two grades, finished high school at 16, and completed college in 2 ½ years with a degree in engineering physics from Lehigh University. After serving in the Navy in World War II, he started working at the company as a transitionary step prior to going to medical school. During the stay, he discovered a love for tinkering with production machines and working with another engineer, Joe Truse, discovered a way to automate the Peeps manufacturing process. In 1959, when his father died he became president of Just Born, Inc. and happily spent the rest of his days being a real world version of “Willie Wonka”. Today, the company makes an average of 5.5 million Peeps a day. Unfortunately, Bob Born passed away earlier this year (https://www.cbsnews.com/news/father-of-peeps-bob-born-dies-at-98/). His entrepreneurship and engineering legacy will survive in Easter baskets indefinitely.
Peeps is a great example of a dominant product that is the life blood of a company. IBA, as a nearly fifty year old business brokerage firm specializing in the sale of privately held companies and family businesses in the Pacific Northwest, has sold many companies where one product line produces a majority of the revenue. The companies have included software firms including Pathlogix (https://www.pathlogix.com/), manufacturing businesses like American Dream Products (www.adp-usa.com), & Solar Gem Greenhouses (https://solargemgreenhouses.com/), and wholesale distribution entities such as Pedag USA (https://pedagusa.com/).
The following are elements that enhance the value of a company with a dominant product in the business opportunity marketplace:
- Trademarks, Copyrights, & Patents – Imitation is the sincerest form of flattery. It also can cost an entrepreneur/inventor millions of dollars. It is strongly recommended that ideas, processes, and inventions be protected early in market creation for them.
- Market Share – A company that is gaining market share is winning with consumers. People & companies vote with their dollars when they make purchases, the larger the revenue created by a product and percentage of sales secured in a market segment the higher the value of the company.
- Geographic Distribution – Open frontiers for sales & distribution of a product or service equate to unrealized potential. Opportunity can exist in a city, state, region, country, or internationally depending on the product or service. A great example of bringing a product from overseas to the American market and experiencing incredible entrepreneurial success is Sriracha (https://www.npr.org/sections/thesalt/2019/01/16/681944292/in-home-of-original-sriracha-sauce-thais-say-rooster-brand-is-nothing-to-crow-ab). A decade ago the product had a cult following, today, it is a “must have” condiment for many homes and used as flavor for everything from potato chips and almonds to peanut butter & sauerkraut (https://www.onegreenplanet.org/vegan-food/sriracha-flavored-snacks/).
- Non Centralization of Knowledge & Leadership – Companies sell for higher values if knowledge & executive leadership is not held by one person. Mature, successful leaders delegate and empower. Ideas and execution are always enhanced when a talented team works collaboratively to achieve common goals.
The sale of a privately held company or family business is a sophisticated, nuanced process requiring knowledge, experience, and a high level of skill. Selling a business that is in essence “ a one hit wonder” in a mergers & acquisitions transaction employing best practices that achieves a premium value in the marketplace is a level of representation that requires an advanced degree in business brokerage. If you are interested in selling a company with a dominant product as a component of revenue in the Pacific Northwest, IBA would welcome the opportunity to learn about your business, exit strategy objectives, and provide an overview of our client services. All conversations with IBA are held in strict confidence. IBA only seeks payment from customers upon completion of a project. The firm does not charge retainers or administrative fees from sell side clients.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.