This story is part of CNBC make it The Moment Series, where highly successful people reveal the defining moment that changed the course of their lives and careers, and discuss what made them leap into the unknown.
First time Daniel Lubetzky Acceptance of large investment funds for snack typeI made a huge mistake.
Today, Kind is a big name in the snack food industry, It is said to be worth $5 billion when it was acquired by food giant Mars in 2020. But in 2008, the company was much smaller, and the money — $16 million, from a private equity firm called VMG Partners — was critical to its ability to grow.
There was just one problem: The deal called for Lubetzky to sell the company within five years. At the time, he thought it sounded like a good idea. But four years later, Lubetzky felt he was still the best person for the job.
So, he took a gamble that saved him from losing control of his company — and eventually enabled it to become a multi-billion-dollar brand, he says.
He bought his shares in the company from VMG.
It was expensive, risky and time consuming. Lubetzky was to raise $220 million for the deal, a combination of company money and millions of dollars in bank loans. Any drop in Kind’s revenue could have meant a default on that debt, possibly costing him his company forever.
Negotiations took two years, culminating in 2014. Kind’s annual sales almost doubled That year—and when Lubetzky finally decided to sell the company six years later, it was worth billions, not millions.
Here, he discusses the decision to buy back those shares, why he was willing to take such a big risk and how he overcame his fears to regain control of his company.
CNBC Make It: What have you been thinking as the Kind Sale deadline approaches? What prompted you to buy back the share of the private equity firm?
Daniel Lubetzky: It’s like you’re climbing a mountain. Once you reach a peak, you can see higher, and then you have to climb another peak, and then you see a higher peak.
that happened to me. Four years into the deal, I knew Kind could get a lot bigger.
My investors pushed me to sell the company, and they were very excited. My vision was to continue to grow the company for many years to come. Their vision was to go out and get a return on their investment.
So we ended up buying them. Now, since I had not pre-negotiated the terms of their purchase, they turned out to be very expensive – and very risky. It was a very painful negotiation.
How confident are you that your gamble will pay off?
I had a very strong feeling, drawing from our momentum, that this is not the end—nor the beginning of the end—but the beginning of the beginning. And I wanted to continue.
But that was a scary moment. What if something goes wrong? Then all of a sudden, you have a lot of debt, and you might lose your company. I suffered from sleepless nights. Maybe we got a $200 million loan.
I did a lot of research on what the company could be worth [in the future]. It wasn’t just a complete cowboy action, as I was doing it blindly. I would call it a very calculated risk, a carefully designed risk.
However, things could have gone wrong. I could have lost the company. But I believe in type.
What do you wish you knew at that moment?
Mostly, I wish I knew everything was going to be okay. There were many sleepless nights and extreme stress until we landed.
I wish I’d known in 2008 that when I’m negotiating with a private equity firm, it’s not their way or the highway. Once you bring in investors, your company is no longer there. You have to remember that it is now a company that you and others own.
At the same time, it’s your child, and you should try as much as possible to keep options for the future. Even if you think you know that in five years, you’ll want to do something, keep your options open. You never know where you will actually be at that point.
Where do you think Kind would be today if you hadn’t bought control back?
I think there’s a possibility, or maybe a possibility, that had we done the resale in 2013, Kind wouldn’t have achieved what it does today. We were going to get lost in big company.
When you sell a company to a larger company, if your company is not large enough to stand on its own as a separate entity, the larger companies cannot get themselves out of the way. They can really hurt the company they are acquiring. You see her all the time.
I am still an important stakeholder in Kind today, and I continue to guide them. We agreed with our partners in March that Kind will be a separate standalone platform, and Kind continues to grow by double digits.
It is not just about achieving more financial success with this path. There is a possibility that Kind will not reach the tens of millions of consumers it reaches every day now.
This interview has been edited for length and clarity.
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