Estate Planning and Management Transitions

Dairy Fresh L.P.

Founded in 1984, Dairy Fresh was one of the most profitable dairy processing companies in the U.S. The four partners of Dairy Fresh, all of whom were in their sixties, were looking for a way to monetize their investment while providing for a management transition. Unaware that a recapitalization was an option, the partners initially attempted to sell their company to a strategic buyer. However, they were unable to achieve what they believed to be a fair price.

ZS learned of the Company and immediately met with the partners to understand their individual objectives. Based on these objectives, ZS structured a transaction whereby the partners received cash, equity ownership and a deferred payment based on the Company’s future performance. As planned, ZS and the partners collectively hired a successor to the retiring President. Approximately two-and-a-half years after our initial investment, ZS engineered a refinancing of the Company whereby a distribution of already-taxed earnings was made to all of the owners, and the deferred payment to the partners took place ahead of schedule. The following year, the Company was approached by a strategic buyer who was consolidating the industry, and the partners, ZS and the new President (who had been awarded equity in Dairy Fresh) unanimously decided to sell the Company.