The absentee shareholders of RedStone, a branded fruit processing equipment manufacturer with over 90 years of operations, seek a new owner. The company manufactures and rents highly automated equipment for several niche fruit processing applications. RedStone assembles its products in-house and leases them to national and international food processors. Average customer tenure of the top 10 customers has been over 30 years. RedStone has begun expanding its rental fleet recently and will have over 540 machines under leases by the end of the year.

The Company has in-house design and engineering capabilities. It is launching a new patent pending machine for a new fruit this year. This machine is already under a test lease with a customer who expressed interest in several machines. Redstone’s 15 employees provide all facets of its operations today. The Company’s President has strong experience in the food processing industry and can remain with the business post-transaction. With that said, he’s also open to a transition to a new President with experience in machine manufacturing or fruit processing. RedStone also engages agents and contractors in various parts of the world to support its sales and service efforts.

This business has been owned by a large and diversified family office for more than 60 years. With current shareholders in their 60’s and 70’s, they realize it’s time to let RedStone find another good home. As such, they seek a full exit. The family’s objective is to maximize the sales price through the sale to a financial or strategic buyer. This business could be an excellent acquisition for an experienced searcher looking to grow organically and through acquisition in the food processing equipment space.

BAMA believes the ideal buyer is either:

1. A strategic buyer who can incorporate RedStone’s equipment manufacturing, parts and service business into their own portfolio of food processing equipment. Such a strategic buyer will enjoy RedStone’s long-term customer relationships and leasing model which drive consistent recurring and predictable base revenues.
2. A financial buyer with experience in food & beverage equipment manufacturing can use RedStone as a mini platform to buy and build a diverse food processing equipment operation.

Facilities

The company owns an ±11,345 square foot facility (±1,500 SF Office Area) for equipment assembly, storage, and maintenance of machines. Real estate can be part of the transaction, or part of a sale leaseback arrangement. The Shareholders prefer to sell the company and its facilities together. They are also open to a FMV sale/leaseback with a third party or a short-term lease to a strategic who may want to integrate the operation into their own facilities.

Market

The food processing industry represents more than 200bn annually. It is highly fragmented with many niche manufacturers with specific equipment for unique food processing applications. RedStone provides machines for several unique processing applications, each having a variety of competitors globally. Due to its best of breed equipment, technology and yield, it wins in side by side competitive applications. It doesn’t spend a lot of money on sales and marketing and would benefit from tapping resources of a larger strategic buyer with dedicated sales resources and a global market presence as there is still substantial organic growth available domestically and globally.