Markel Ventures has added 20-plus companies to its roster in the past 15 years
If you’re eating a hamburger from a fast-food restaurant, there’s a good chance that Richmond-based AMF Bakery Systems had a hand in making the bun.
The company, which has a factory on Laburnum Avenue in Richmond, is part of a larger group of businesses called Markel Food Group that operates 10 factories around the world. Those factories manufacture equipment that AMF’s customers — industrial bakeries — use to produce billions of buns, crackers, cookies, pretzels and pizzas every year.
Ken Newsome, the CEO of Markel Food Group, said the company is about 15 times the size it was when he acquired it along with other local investors in 1997. The business has grown from about 125 employees to more than 800 around the world, including about 160 in the Richmond area.
Much of that growth has come since 2005, when AMF Bakery Systems was acquired by Henrico County-based Markel Corp., a Fortune 500 company whose primary and largest business is specialty insurance.
“Without the capital of Markel and the support of Markel, none of this would have happened,” Newsome said of the growth of Markel Food Group, which includes AMF Bakery Systems.
“We have made several substantial acquisitions along the way, and it was all their capital,” he said. “The Markel folks have been unbelievable partners. They are my counselors and advisers and coaches and friends.”
AMF Bakery Systems was the first acquisition for Markel Ventures, an investment arm of Markel Corp. that buys companies outside of the insurance business.
A little more than 15 years after Markel Ventures was created, the portfolio of businesses has grown to include 21 companies in industries as diverse as fire suppression systems, concierge medicine, construction, technology consulting, decorative plants and fashion leather handbags.
Ten of the Markel Ventures companies are based in the Richmond region.
Thomas S. Gayner, Markel Corp.’s co-CEO and the creator of the Markel Ventures business unit, said it wasn’t part of the strategy to invest specifically in Richmond-area companies.
Markel Ventures has made acquisitions worldwide, but local companies are a significant part of the portfolio because many of its acquisitions have resulted from relationships that took years to develop.
For instance, with the first deal to buy AMF Bakery Systems, Gayner said he had known Newsome professionally and personally for some time.
“I trusted him and liked him, and the company [AMF] is in an industry that seemed like it was not going to be technologically disrupted,” Gayner said. “Bread has been around for thousands of years.”
“We were able to strike a deal to purchase AMF and keep it headquartered here in Richmond, and it just grew from that,” Gayner said.
“Once we did that deal, we gained credibility” as an option for other companies looking for a buyer, he said. “The phone started ringing.”
Since then, roughly half of the deals struck by Markel Ventures have come through a more traditional buyout structure involving investment bankers who reach out to Markel about potential acquisitions, Gayner said.
“But literally half of our deals have come about through person-to-person contact, with no intermediaries,” he said.Read Full Article
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