Episode Summary
Executive Summary: Hank Hartong of Brinwood Partners explains how the firm used its operating-heavy, sector-focused private equity model to turn Hometown Food Company from a declining Smucker’s carve-out into a scaled baking and pancake platform. The conversation covers carving out the business, building the team and systems from scratch, fixing supply chain issues, investing in innovation and digital marketing, navigating COVID and inflation, and executing tuck-in acquisitions that expanded the company into a leading category player.
Main Topics: Brinwood’s operating-partner private equity model (Priority: 5/5): Hartong describes Brinwood’s founding philosophy: combining investing and operating expertise, staying close to portfolio companies, and solving business problems hands-on rather than relying on consultants. Hometown Foods carve-out from Smucker’s (Priority: 5/5): The deal originated as a corporate carve-out of Pillsbury baking and dessert mix brands from Smucker’s. Brinwood saw a neglected asset with recognizable brands, but also major complexity: no employees, an oversized factory, and declining sales. Building a company from scratch after the acquisition (Priority: 5/5): Brinwood stood up Hometown Foods by hiring a management team, setting up offices in Chicago, using a TSA, converting ERP systems, and re-establishing the business with retailers and internal operations. Supply chain and factory optimization (Priority: 4/5): The firm discovered the inherited warehousing and logistics setup was inefficient and not delivering OTIF performance. It consolidated warehousing, rethought distribution, and invested in equipment and in-house capabilities like a gluten-free room. Innovation, marketing, and brand revitalization (Priority: 4/5): Brinwood expanded Funfetti and other brands with many new SKUs, seasonal products, and faster testing cycles. The team also shifted marketing toward social media and digital engagement as consumer behavior evolved. Tuck-in acquisitions and platform building (Priority: 5/5): After stabilizing the business, Brinwood added Arrowhead Mills, the frozen pancake business/Waffle Bakers, and Birch Benders, integrating them into a larger multi-plant platform with stronger category scale. COVID, inflation, and pricing discipline (Priority: 5/5): Hartong discusses operating through pandemic demand spikes, labor constraints, and severe inflation in wheat and inputs. The company chose to raise prices transparently and protect service levels to maintain retailer trust.
Key Arguments: Brinwood’s edge is operational execution: it buys underinvested businesses and improves them through hands-on management, not financial engineering. Corporate carve-outs can create value when the seller has not invested in the business for years; the buyer must identify and fix neglected areas quickly. Even with household-name brands, a carve-out can be risky because there may be no management team, no standalone systems, and inefficient logistics. Brand innovation can be accelerated in private equity when teams avoid slow stage-gate processes and test ideas directly with customers and retailers. Social media and digital shelf dynamics materially changed how baking brands are marketed and discovered, making creative, visual brands like Funfetti especially valuable. Operational service levels can offset pricing pressure; during inflation, reliable shipment and transparent communication helped preserve retailer relationships. Scale through tuck-in acquisitions can transform a platform from a carve-out into a leading category competitor with better economics and strategic value. The best private equity outcomes come from building durable businesses and creating jobs, not just closing transactions.
Data Points: Middle market businesses in the U.S.: ~200,000 - Estimated number of middle market businesses discussed in the opening of the podcast. Middle market revenue range: $25 million to $1 billion - General definition of middle market businesses given at the start. U.S. workforce employed by middle market: 50 million people - Opening framing for why middle market businesses matter. Share of U.S. private equity deal value: Two-thirds - Opening statistic on middle market significance. Brinwood founding year: 1984 - Hartong says his father founded Brinwood in 1984. Brinwood anniversary: 40th anniversary next year - The firm was approaching its 40-year mark. Hometown acquisition year: 2018 - Brinwood acquired the baking and dessert mix business from Smucker’s in 2018. Factory size in Toledo: 650,000 square feet - Size of the main manufacturing asset at acquisition. Employees at closing: No employees came with the transaction at close - Brinwood had to build the organization from scratch; factory employees transferred, but corporate employees did not. Funfetti sales at acquisition: About $30 million - Funfetti brand sales when Brinwood acquired the business. Funfetti sales later: Over $100 million - Hartong cites strong growth after investment and brand expansion. New SKUs launched in first year: 15 to 20 SKUs - Approximate number of new Funfetti and related products introduced after acquisition. Existing/new product comparison: First-year launches equaled the prior five years combined - Hartong says the first year’s launches matched the number of launches in the previous five years. Arrowhead Mills acquisition timing: About 13 months after the initial deal - One of the first tuck-in acquisitions after stabilizing the platform. Waffle Bakers/Birch Benders acquisitions: April 2021 / end of last year - Timing for later acquisitions mentioned in the discussion. Hometown current scale: Almost 900 employees - Current size of the business after acquisitions and expansion. Hometown current manufacturing footprint: Three factories and almost 850,000 square feet - Scale after integrating multiple businesses. Sales growth: Almost doubled sales since purchase - Overall performance of Hometown under Brinwood ownership. OTIF metric: On time and in full - Key service KPI used to diagnose supply chain problems. Wheat price move: From about $4 to $5-$6, then up to $8 and as high as $14 per bushel - Illustrates the inflation shock and pricing pressure in the category. Pricing notification lag: 90 days - Typical retailer contract timing for pricing changes. Initial factory shutdown exception: Mother’s Day - Hartong says he insisted the factory remain closed on Mother’s Day during COVID. Job creation in Toledo factory: 60 jobs - Result of keeping and growing the factory rather than closing it.
Pivotal Quotes: "We’re not just about providing capital. We’re about providing solutions and assistance to our portfolio companies." — Hank Hartong: Explaining Brinwood’s operating-oriented investment philosophy. "If it’s a good idea and you think it makes sense, then ship it." — Hank Hartong: Describing Brinwood’s fast-moving approach to product innovation and testing. "This isn’t just a vehicle. We’re generating returns... But we’re trying to build something that I want to see institutionalized." — Hank Hartong: Reflecting on the purpose of private equity beyond financial returns.
Implications: The episode shows how hands-on operational ownership can unlock value in neglected middle-market brands. For PE, the playbook is clear: fix the basics, innovate quickly, maintain retailer trust, and use acquisitions to build a durable platform.
About Private Equity Deals
Allocator and asset management expert, Ted Seides, conducts in-depth interviews with interviews with top institutional money managers across private markets. Guests include principals and senior leaders from private equity, private credit, real assets, and other alternatives. We dive deep into individual deals to learn about deal dynamics, companies, and ownership that make private equity a force in institutional portfolios and the global economy. Learn more and join our community at capitalallocators.com.