Advantage Sales & Marketing LLC in Irvine is counting on its new owners to back its strategy for growth, which includes international expansion and diversification of its service.
Two private equity firms—Leonard Green & Partners LP and CVC Capital Partners—acquired a majority stake in the company from London-based Apax Partners LLC for $4.2 billion last week.
Advantage’s management is expected to remain in place and continue its aggressive expansion strategy of recent years, which grew to include deals overseas starting about six months ago.
“We are buying and acquiring companies all over the world, and our next big move will be to take our services and our solutions and build businesses internationally,” said Advantage Chief Executive Tanya Domier. “It’s exciting—we’ll start in Europe, and then we’ll be going to China, Brazil and Mexico.”
The change in ownership hasn’t dimmed Domier’s enthusiasm for the plan.
“During the time that [the new owners] were doing their due diligence, I was doing my diligence on them. I was understanding what kind of value they would be able to bring to this company,” she said. “Leonard Green, for example, has many retail platforms that we can use to build, and CVC is very big internationally. They are great partners for our next chapter of growth because they both have unique assets.”
Advantage specializes in sales and marketing for consumer goods manufacturers and retailers, including major chains such as Wal-Mart Stores Inc. and Kroger Co. Its services range from food brokerage to digital marketing, with in-store merchandising technology and market research tools in the mix.
The company has a market share of about 40%, according to Domier, and reported $1.7 billion in revenue last year, which placed it in the No. 10 spot on this week’s list of the largest private companies based in Orange County (see related stories, page 1; list starts on page 12).
She said she anticipates Advantage “will be a $2.5 billion company in the next four to five years.”
Apax, a private equity firm, paid for a controlling stake in the company in 2010 for $1.8 billion.
Domier, a mother of three teenage boys, and a 24-year veteran at Advantage, credits the company’s recent growth to a strong relationship between management and Apax. The growth also tracks to a roll-up strategy that included 23 acquisitions in 2013. Almost all were strategic moves “in the area of food service and deli, and in marketing services—in digital, multicultural and marketing products,” she said.
Advantage also implemented several initiatives that enabled it to run more efficiently and meet growth projections, according to Domier.
“We really looked at the business four years ago, and we said, ‘What got us here isn’t going to get us where we want to be in the future. The world is changing, the customers are changing. How do we—instead of just being happy being the dominant player in our field—how do we create a best-in-class business services solutions company?’” she said. “We asked ourselves a question: ‘What makes a service company great?’ And we came up with five things that I worked on with Apax, with their support … which made an incredible difference in how quickly we can build and transform the business.”
First on the list was an executive shakeup—17 out of 23 people on the Advantage management team retired and were replaced by “next-generation talent” Domier said.
The second area of focus was unifying the company’s culture.
“We started this transformation early, and it took us about 18 months to do the heavy lifting,” she said. “We really focused on making sure that we knew how engaged our associates are; what can we do to make them more engaged? We also put performance-based programs in place.”
Advantage also centered on “creating raving fans of our clients and customers,” Domier said. “We took an approach that was customized and flexible with each client. We really don’t believe that there is a one-size-fits-all approach to that. We did it by being good consultants, listening to what their pain points are, listening to what the needs of the business was, and then seeking to create solutions that we can take to (the) marketplace for them, rather than just saying, ‘We have a service; here it is.’”
The fourth pillar of the turnaround plan focused on increasing operational efficiency, she said, adding that with a workforce “of 38,000 people, it’s very important to be efficient and compliant.”
The changes led to growth in sales and profits, according to Domier, who said Apax quadrupled its investment with the recent sale.
“If you have the right people, if you provide the right culture, if you create raving fans out of your clients and customers, and you do it efficiently and compliantly, your business will grow, and that is exactly what we did.”
