Private equity has entered the food and drink market in a serious way, with a raft of big money acquisitions in 2006.
The number of deals involving private equity rose from two in 2005 to seven last year in the UK, but it is the value of the new deals that is striking. More than half (50.7%) of the £6.8bn spent on acquisitions came from private equity compared with just 2.3% in 2005. Two of the biggest deals involving private equity were worth more than £1bn.
The money men have swooped, in particular, on frozen. Brands such as Birds Eye, Findus and Heinz's frozen divisions have all fallen into the hands of private equity firms in the past two years, who hope that by acquiring several players in the same sector, while stripping out costs, they can create stronger market positions.
Unilever's frozen foods division was an "ugly duckling" prior to the sale, says Luke Jensen at OC&C, but he expects owner Permira to take it to a new level after spending £1.16bn last December.
Of course, the private equity boys may flash the cash, but there's no reason why companies can't learn a lesson and restructure. Businesses need to be fully flexible asset workers if they are going to thrive, and selling off peripheral assets, rationalising manufacturing and outsourcing non-core functions are high on the agenda.
Large food groups still to complete restructuring need to get their skates on or the money men will be looking to step in once more, says Jensen.
"Private equity firms have large funds available and a growing knowledge of the food and drink industry so the big deals will continue to flow," he predicts.
"Those companies that have already gone through the process of restructuring are reaping the rewards."