At Seafood Expo North America back in March, a conference session I moderated, titled “On the Money: Trends and Opportunities for Investing in Seafood,” was as educational as a university lecture. Three experts — one from the commercial banking sector, one an investment banker and the last an industry veteran-turned investing consultant — gave attendees high-level insight into how to prepare for a potential business sale and how to evaluate acquisition targets in the fish business.
Jeff Davis, the former CEO of American Seafoods Group and Baader North America Corp., was there representing his consulting firm, International Sea Partners, or ISEA Partners. The former part owner of the major Seattle-based seafood supplier with roughly four decades of industry experience had a lot to share about researching business deals. He frankly told the audience that day that nobody cares how “pretty” your business is. “We’re buying a cash-generating machine,” he said. “When you buy a business, the business needs to pay back investment, which comes from cash generation.”
It was no surprise, then, that only a few weeks later, Davis and his partners at New York private investment firm Bregal Partners bought eight
“The fishing industry is a very complex business. You don’t just go out and throw a net into the water. Fleet managers needs to be like lawyers,” said Davis, who retains a non-voting seat on the board of directors at American and also is chairman of Marine Stewardship Council (MSC) International, the “business end” of the eco-label. He had been involved with Atlantic sea scallops on the processing and marketing side while at American, which operated American Pride Seafoods in New Bedford, Mass., the top scallop port in the United States.
Smart seafood industry investors know that access to the resource is paramount, so controlling a fleet of vessels is key in a fishery that still operates under a “derby-style” days-at-sea system. But the resource also needs to be sound. The fact that the sea scallop fishery has earned MSC certification was a major selling point for Davis and his team.
“We spent a lot of time looking at scientific data on the harvests and the resource. It’s the No. 1 thing you should look at: Are the fish going to be there when the time comes to fish them? We felt strongly it was a unique resource in a good position,” he said. “A poorly managed resource, you would not want to invest in that fishery long-term. It’s a problem for the groundfish industry now — a lot of questions that get people worried.”
It doesn’t hurt that North Atlantic sea scallops also are in high demand around the world, commanding a premium at USD 20 (EUR 17.60) or more, wholesale. “We saw a good domestic market, good export opportunities,” he said.
The business, run since the 1970s by Frankie Peabody and his family, has a small offload facility in Newport News (the vessels also
For Davis, Blue Harvest might be his last career move. Without divulging his age, he said he feels like he's at the peak of his career and, despite stepping down from his post as CEO at American in 2005, he never considered himself out of seafood.
“My passion has always been the seafood business. When I left American, I was traveling a lot, I had a young family. I wanted my time back,” said Davis, who’s energized by his latest venture. “We plan on growing this. One way is through acquisition. It won’t be our last one, but I would like to make this my last career move. I’d like to really grow one more business in my career.”
