When Stuart Sorkin bought Affy Tapple LLC in 1995, he got a once-proud company that was fading into obscurity. By the time he sold it in late 2017, it was the largest wholesale caramel producer in the country.
There were more than a few challenges along the way.
“When we bought the company, it had no computer systems, no management of any kind in place,” Sorkin says. “The original owners were aging and had let the company go. We had to rebuild it from the ground up. The brand had been so strong and that’s why I was interested in bringing it back.”
It was a labor of love, but after more than 20 years, Sorkin felt like he had accomplished everything he had set out to do with the business.
“There's no specific equation that spits out the answer that it's the right time,” Sorkin says. “There's an equation that tells you it's the right time if you're going south because you don't have a choice. But when you're going north, there isn't always the equation that says, ‘OK, this, this and this equals it's time.’ So a lot of the decision to sell was personal.”
Smart Business Dealmakers spoke with Sorkin about his journey rejuvenating Affy Tapple and the difficulty he faced making the decision to exit the business.
A new attitude
Prior to acquiring Affy Tapple, Sorkin was vice president of business banking at American National Bank of Chicago, which is now part of JP Morgan Chase. His customers and advisory clients consisted of small and midsize private companies in a wide range of industries, including the food industry. He worked closely with these entrepreneurs in all facets of growing their businesses.
He would need those skills and more to tackle this challenge. But it was more than creating an organizational structure from scratch, building a new management team and developing operational systems.
“We had to go out into the marketplace and let people know that this brand they hadn’t seen in a while was back with new ownership and a new attitude,” Sorkin says. “At the time, there were several different caramel apple companies in the Chicago area and the Midwest. We had to displace them over a period of time in order to get back to where I had planned on bringing the business, back to where Affy Tapple was the dominant brand in the industry.”
Once Sorkin got some traction in the marketplace, he began to think about expansion. In 2001, he bought Mrs. Prindables, a gourmet apple and confectionary company.
“With the acquisition, we doubled the size of the business overnight and immediately got access to specialty gourmet, specialty retail and direct response TV,” Sorkin says. “We took the Mrs. Prindables brand and started a direct-to-consumer site which is a leader in its category. From just another vendor, we became one of the largest food vendors on QVC shopping network.”
An emotional decision
Many dealmakers talk about how they begin thinking about exit strategy before they’ve even closed on a deal to acquire a business. That wasn’t the case for Sorkin.
“The company was so small that a potential exit near term or a five-year exit was not the strategy that we used,” he says. “We thought that there would potentially be a longer-term window on this, so we didn't set out a strategy of buy and then sell it.
“I did have investors in the first acquisition with a five-year horizon for a buyout. I had a plan on growing the company sufficiently to get those investors a return back. But as we got into it, the opportunities were for much greater than five years.”
Sorkin stayed true to his word and bought out those original investors, then set out to continue growing the business. He led the relocation to a state-of-the-art facility in Niles, and later, a renovated factory store. Eventually, he began to think about his future.
“The company was in great shape and we had it in a position where it was ready to grow quickly from where it was,” Sorkin says. “And so I had to make the decision whether I wanted to dig down and go through that growth again. Because with growth, you need to add people, you need to do a bunch of things to get to the next level.”
With his kids entering their college years and after working so hard for so many years to build the Affy Tapple brand, Sorkin felt ready for a change. But it was far from an easy decision to make.
“One of the key things in making a decision, you need to have a good set of advisers available to you, whether it's your board of directors, investment bankers, professional advisers, lawyers, accountants,” Sorkin says. “You absolutely need that because your thought process is emotional. You need to try to eliminate as much of the emotion as you can in making the decision.”
The risk of filtering
Sorkin worked with his advisory team to go through various options and cultivate a list of potential buyers.
“We did experience possibly a limited population of interested parties based on the filtering of what we wanted,” Sorkin says. “It immediately tossed out a number of potential acquirers.”
Filtering can obviously be helpful in the effort to zero in on the right buyer. But it can also make it more difficult to complete the process.
“It's very well possible that you may not find a purchaser or an acquirer who meets the goals and criteria that you set out,” Sorkin says. “You've got a tough decision to make at that point.”
Sorkin ultimately chose to sell Affy Tapple to Woodridge-based Beavers Holdings, a holding company for food-related companies.
“You can always go back and look and say that you wish you could have done things differently or chosen somebody different,” Sorkin says. “But in the end, the transaction might not have been that much different no matter who we had chosen, so I'm happy with the results.”