New Jersey-based and family-owned Goya Foods decided it will not sell the company to the Carlyle Group, according to The New York Post. The newspaper quoted sources saying the Unanue family wanted to continue running the Latin American food giant after the sale, but the private equity firm wanted to take over and take Goya public.
Goya, best known for canned beans, rice, olives, cooking oil, coffee, bottled sauces and tropical drinks, has been family owned and operated since its founding in 1936. According to the Post's sources, family members were not in accord about selling the company. They initially sought a minority investor after hiring Goldman Sachs to look at strategic options in May. When that didn't work, they began entertaining offers to buy a majority stake.
Sources told the newspaper Carlyle executives thought the business needed improvement to prepare for an IPO, particularly if the investment firm was going to shell out between $3 billion and $4 billion to buy it. Goya CEO Robert Unanue told the newspaper the company is not for sale. "Goya is and will always be committed to building on our legacy of supporting our communities, established by our founding grandparents 83 years ago. We will never betray that mission," he said.
According to this story, Goya refused to sell because it wouldn't retain some form of family control over the company, which was established in Manhattan by Spanish immigrants Prudencio and Carolina Unanue. Since 2004, it has been headed by their grandson, Robert Unanue, who told Fox Business in 2015 he has been with the company since he was 10. Goya states on its website it is the largest Hispanic-owned food company in the U.S.
Family-owned businesses can become increasingly difficult to run over time. While more than 30% will make it to the second generation, only 12% continue to be viable into the third generation, and just 3% are operating under the fourth generation or even more, according to the Family Business Alliance.
One reason behind those discouraging statistics is growing discord among family members, including conflict over whether to sell a company or not. This seems to be the case with Goya, where some family members apparently wanted to move forward with selling a minority stake but not a majority one if it meant shifting control to an outside entity.
It's also possible Goya's owners couldn't see a private equity firm maintaining the culture of an extended family, which Robert Unanue told Fox Business was part of the company's success. He said Goya is not a bureaucratic organization and that he encourages employees to come to him with ideas and opinions, regardless of whether he agrees with them. That approach might not mesh well with the culture of a large investment group like Carlyle — particularly if the goal is to tighten up business operations prior to an IPO.
A sale of Goya could still materialize if the Unanue family gets on the same page about it. A large CPG company might be interested in gaining a foothold in the Hispanic foods market, where sales have risen along with the group's population. According to the U.S. Census Bureau, it had grown to 58.9 million as of July 2017, or about 18.1% of the total U.S. population. The MSL Group reported the demographic will account for more than half of the country's population growth by 2020, and that it currently wields $1.5 trillion in purchasing power.
Big CPG companies have been acquiring more independent and family-owned businesses. Such M&A activity can assist them with moving into trendier growth categories — for example, when Mondelez purchased Tate's Bake Shop and Kellogg bought RXBAR.
Some consumers might also favor family-owned firms because the brands are familiar and can signal stability and a longer-term presence. The J.M. Smucker Co. has been family led for five generations, and the Smarties Candy Co. recently celebrated its 70th year under family ownership and is led by two third-generation sisters and a cousin.
For Goya, assets include its long history, the growing niche market it occupies, its ability to add organic products to expand beyond that niche and its willingness to invest in new production and distribution facilities. Goya products aren't only staples for many Hispanic families, but they've become popular with other consumer groups intrigued by authentic ethnic foods and wanting to give them a try.
If the Unanue family can steer a steady course through this current rough patch, the company may eventually draw a suitable minority investor who can help take it to further success — yet without wanting to completely take it over.