BOULDER — Bobo’s Oat Bars CEO TJ McIntyre was hired in 2016 to lead the company through a period of significant growth. That growth — which required venture capital investment — has outpaced expectations, leaving company leaders reckoning with the notion that sooner or later a sale to a larger entity within the foods/consumer-packaged goods sector will be necessary to facilitate Bobo’s next growth spurt.
“Like every business in this industry, we’ve raised capital from venture capital firms. That capital has to be returned at some point — they didn’t just place it in here to sit forever,” McIntyre told BizWest. “So theoretically, this business has always been for sale since I got here seven-and-a-half years ago.”
Building Bobo’s into a national-scale natural foods industry player “required outside capital,” McIntyre said, “and that outside capital has to be repaid. So there will be a transition of someone else owning this business at some point in time.”
Bobo’s, according to Crunchbase, has raised $17 million from investors over the past half-decade or so.
The potential sale of the Boulder-born oat-bar maker, named after Bobo’s founder Beryl Stafford’s daughter, was first reported by Axios.
Over an extended period of time, Bobo’s has experienced “outsized success” compared to previously established sales and growth metrics, McIntyre said. “The success that we’re having has put a lot of pressure on us from a capacity perspective,” despite having opened in late 2022 a 123,000-square-foot “super bakery” in Loveland.
“This is our very last bakery — I hope,” Stafford said during the November grand opening of the Loveland facility, which can churn out 1 million bars a day at full capacity. “This is enormous and way too big for us right now.”
McIntyre said that — regardless of the new plant and its expanded capacity — “we’re going to handily beat our [production] plan.”
That planning has become more complex as Bobo’s offerings have expanded into new categories such as protein bars, chocolate-covered snacks and peanut butter and peanut-butter-and-jelly stuffed treats. Financial planning and modeling is also more important than ever as Bobo’s prepares to engage with would-buyers, who demand demonstrable and predictable profits.
“What we need to do is make sure we can manufacture [enough products] to meet all of the demand we’ve created, and achieve not just a predictable through-put in our facilities, but a predictable P and L (profit and loss),” McIntyre said. Specifically, the company needs to be able to predictably forecast its profitability levels when revenues reach upward of $10 million per month, which Bobo’s is rapidly approaching.
“When the time is going to be right for Bobo’s to sell, we’re going to have to have a very attractive EBITDA,” McIntyre. “The climate around mergers and acquisitions in CPG (consumer packaged goods) has dramatically shifted in the last 24 to 36 months: If you’re not approaching $100 million in revenue or above, and if you’re not meaningfully profitable historically and predictably into the future, there’s not many buyers.”
The company, McIntyre said, “will go to market when we can check all of those boxes. Maybe that means at the end of the summer we might want to find an investment banker who is a partner for us, or maybe it’s going to take longer.”
While Bobo’s gets its ducks in a row before formally engaging with M&A advisers, potential suitors aren’t waiting around.
“We’re getting more in-bound (inquiries) than ever,” McIntyre said. “Our attendance at Natural Products Expo West,” a giant trade show held this month in California, “was met with great interest.”
Still, McIntyre said no hands have been shaken or contracts inked.
Exactly what a deal might look remains to be seen, but McIntyre is adamant about what kind of deal he’s not pursuing.
“I have no interest in being a publicly traded company’s CEO,” McIntyre said. “I was at Boulder Brands for six years before Bobo’s,” and determined that publicly traded firms are somewhat hamstrung in their abilities to plan strategically for the long term. “We’re trying to create a durable, multi-generational brand here. And the public market requires far too much near-term decision making. We’ve got no interest in an IPO.”
What McIntyre is looking for in a buyer is “commitment.” Bobo’s story and mission “has to really resonate with the owners of the business units inside the corporation,” and not just with a megaconglomerate’s M&A team.
An ideal partner would have the resources and commitment to grow Bobo’s to $500 million or more in annual revenue, and “that has a lot to do with personalities,” he said
It’s too early to predict what a sale could mean for the existing leadership team.
“All of us who are here running this business now are absolutely committed to ensuring a very successful transition, and that could be measured in quarters or measured in years,” McIntyre said.
Completely folding Bobo’s into another food brand “would be a mistake, especially if that was on a fast timeline within the first several years” of an acquisition, “because there’s so much love and touch that goes into how we interact with our customers and stakeholders,” McIntyre said. “That’s a big part of the magic that contributes to the outsized success that we’ve had.