Tropical Foods

Industry

Retail

Location

Roxbury, MA

Business Broker

Brian Labonte
Sarah Grossman

Situation

For over 50 years, Tropical Foods has been a landmark in Nubian Square in Roxbury, MA as well as a destination for customers from all over New England for their outstanding selection of ethnic items sourced from all over the world.

In 2006, brothers Ronn and Randy Garry bought the store from Ronn Sr. who had run the store since 1988, having bought the store from his father-in-law, Pastor Medina. Today, many Spanish customers still refer to the store as “El Platanero”, The Banana Man, as Pastor originally sold only plantains. The business expanded to hold a vast assortment of regional products but was well known for their wide selection of produce from around the world and especially from the Caribbean.

For 30 years, Ronn Jr. and Randy worked long days, weekends, and holidays running Tropical Foods with 100 employees. The family business played an important role supporting the diverse local neighborhood, offering employment and stability for many employees, some of whom worked at Tropical Foods for over 20 years.

When Ronn Jr. and Randy started to think about retiring, they were focused on developing a plan that would protect their employees, not wanting to risk a transaction that would unwind all their family had worked for, including its role in the community.

In an online search, the brothers found BayState Business Brokers and chose them as their partner to plan and facilitate the sale of Tropical Foods. They chose BayState for their many years of experience facilitating multi-generational businesses, as well as their experience with the grocery industry.

BayState Business Brokers’ Approach

Sarah Grossman, Principal of BayState Business Brokers, and business broker Brian Labonte worked together to bring Tropical Foods to market. During their first meeting with owners Ronn and Randy Garry, it was discovered that their mother used to shop at Labonte’s family grocery store in Central Massachusetts. An immediate connection was made as Brian, like Ronn and Randy, had grown up in the grocery business.

There were many aspects of selling the business and the real estate that warranted having a team of two highly experienced business brokers working together and tag teaming to divide and conquer. This included the involvement of multiple government agencies including the Boston Redevelopment Authority and the Massachusetts Department of Transportation to facilitate the transfer of the ground lease.

Sarah and Brian prepared the business to go to market which attracted interest from multiple prospective buyers, some of whom had stores serving similar communities.

In parallel to BayState’s marketing Tropical Foods, a buy-side broker approached one of the owners about selling since his client, Apis & Heritage Capital Partners, had been looking at ethnic grocery stores in other markets, and Tropical Foods met some of its core acquisition criteria.

The timing of the buy-side broker connecting with BayState Business Brokers was perfect. Apis & Heritage (A&H) specializes in providing capital to fund ESOP conversions in underserved communities. This connection enabled the collective team to work towards goals that aligned. Ronn and Randy could retire; their employees would become equity owners of the company and A&H would finance the deal and gain operational efficiencies to support continue growth of the business.

The deal structure was atypical for BayState Business Brokers because most owners seeking to do an ESOP do not work with an M&A Advisor. However, their hands-on, structured processes including their attention to detail, and consistent and clear communication delivered tremendous value as complex aspects of the deal were navigated.

Together, Labonte and Ronn Garry focused on identifying, interviewing and selecting an ESOP Trustee. The trustee was an essential individual to represent the employees throughout the transaction including accepting deal terms and structure.

There were many parties involved in negotiating and finalizing the sale of the real estate and sale of the business. For a year, BayState Business Brokers Sarah Grossman and Brian Labonte met with the Apis & Heritage team, real estate attorneys, M&A attorneys, regulatory attorneys, consultants, lenders and the ESOP trustee. Sarah and Brian spearheaded all moving parts to manage the transaction including the sale of real estate to Apis & Heritage, the transfer of the 99-year ground lease with the City of Boston and the ESOP sale of the business. 

The timing was perfect and the fit of the buyer was ideal. The structured deal enabled foundation-backed investment firm of Apis & Heritage to provide the capital to finance a sale that avoided the typical downside of most employee stock ownership plans where the seller is paid over a 10 year period. The structure with Apis & Heritage enabled the sellers to get paid sooner and Apis & Heritage to take on the debt of the transaction.

Apis & Heritage also built a board of advisors to facilitate the transition and promote future growth, which included the owners and consultants with experience in the grocery industry. Together, A&H and the leadership team will support continued growth, strengthen operations, and maintain Tropical Foods’ longstanding commitment to its customers, employees and the surrounding community.

Results

The term “win-win” may seem overused, but it is fitting to describe the result of this sale.

Ronn and Randy achieved their goal: to enable Tropical Foods to continue operations after their departure while taking care of their employees. The transition and structure of the ESOP offered stability for the business, the employees and the neighborhood.

A true team effort resulted in happy clients looking forward to retirement, happy employees, a neighborhood that keeps its local grocery store and customers throughout New England who can continue to count on Tropical Foods for its selection of ethnic foods.

Want to read more about this sale? Read the Boston Globe article, Tropical Foods employees take ownership of Roxbury store.
Read the press release.