Earlier this month Presence Marketing, a national natural products brokerage firm based in South Barrington, Ill., announced it will acquire Topline Marketing, an East Coast region natural products brokerage firm based in Portland, Maine.
Bill Weiland, president and CEO of Presence, discusses why he decided to expand; how Topline's current customers are reacting to the news; and what impacts the decision will have on natural products distribution on the East Coast.
Bill Weiland: The driving force behind it was our goal to build resources to manage our nutrition and body care efforts on a national basis. We still had a lot of regions that were reps selling wall-to-wall, meaning maintaining nutrition and body care as well as many food brands. We have three territories on the Eastern seaboard where dedicated reps sell nothing but nutrition and body.
With this acquisition, now we’re changing that to the whole Eastern region. We’ll have complete separation from Maine to Florida. The master plan has always been to have dedicated reps doing nothing but nutrition and body care and other reps doing nothing but food.
BW: Some yes, some no. That brings us to part B. Before we made this acquisition, we could have easily fulfilled our first need, which was to dedicate more resources to nutrition and body care. We could have just hired more people. Karen Farrell [president and CEO of Topline] and her group caught my attention years ago because we have 11 brands in common. All of them negotiated to carve out Karen’s territory.
So, in other words, we represent Burt’s Bees nationally, and they'd say we’d like to keep Karen’s group in the mid-Atlantic and the Northeast. I gracefully acquiesced to that because I know both Karen’s personal ethos, and her company, line up really well with my ethos and company. That’s kind of unusual. I would say about half of the brands that she was working with we could have taken over, but that's not something I wanted to do.
With this acquisition, of the 11 brands we had in common all are expressing positive feelings about the change. There are some brands that are likely to go away though.
NFM: Which brands aren't coming along?
BW: One big one is Garden of Life. They’re a direct-to-store brand. In the past, both Karen and I worked with direct-to-store brands, but with this company it's just not going to work out. I watched Karen and my senior management team try to work out a plan to make everyone happy. In the end I just had to say guys, they’re gone. We have to face the music here.
NFM: Anyone else?
BW: If I were to handicap it, I would say that there will be some that re-sign and one or two more that decide to go a different route. At the end of the day, a safe bet is that we retain about 80 percent of revenues.
NFM: Topline had a strong portfolio. Why did they sell?
BW: I think a few reasons. Karen had some personal developments in the past few years. She got married and had a baby, so she was doing it all—raising a family and running a business. She hit that point in her life, where she either needed to simplify or get bigger. I think she loved what she was doing, which is what led her to reach out to me.
Though technically we were competitors, we've had a very pleasant and healthy association over the years. I don’t think her initial motivation was to sell her company to me. But we had been in communication about a possible partnership between us. Those talks escalated quickly. Once we started comparing notes, we recognized that we were more on the same page philosophically than we had realized. That helped develop a stronger relationship quickly and create a deal fast.
NFM: How did you determine your offer?
BW: I’m kind of old school on brokerages. This is our fifth acquisition over the years as we’ve expanded. My attitude is if someone has momentum on their side—they are strong, growing and have a great market position—they should get full retail value no matter what the market says. It doesn't matter if the economy is peaking or not.
The offer for the company was one times its revenues. I could’ve easily presented reasoning to offer a lot less than that. But instead of looking at the short term and balance sheet at the end of the deal, I’m looking at the long-term play. The value of this deal was multi-layered.
We're able to strengthen our East Coast presence and therefore national presence with nutrition and body care. And we're continuing to mine the highest level of talent in the industry. Karen will join our senior management team. She’s a terrific lady, brilliant and very talented. These factors contribute to the long-term, landscape view that I look at with a deal like this.
NFM: Will you retain all Topline employees?
BW: We’re deep into that process right now. Our intention is to maintain as many of them as possible. Approximately 75 percent of the team will be, or has been given, offers to come on board. We’re starting to put the finishing touches on those negotiations as we speak. We’ve just gotten some signed contracts back, so it’s a work in progress. Quite a few have been given offers, and we're expecting many to accept those offers.