Keith Levy, Operating Partner at Sonoma Brands Capital

Most consumer brand founders think about exit as an event. Keith Levy thinks about it as a design requirement.

In the second of two episodes, Keith walks through what exit-ready actually looks like in CPG: the revenue and EBITDA thresholds that matter, why you have to get beyond the corp dev team to the operators who actually need what you're building, how capital gets wasted at every stage of a brand's lifecycle, and what the investments that produce exits have in common versus the ones that don't.

If you missed the first episode, it covers Keith's five-pillar CPG diligence framework and the Touchland and Bachan's case studies. Start there.

What You'll Learn

• What revenue and EBITDA thresholds a consumer brand needs to attract a strategic acquirer.
• Why getting to corp dev is not enough, and how to reach the operators who actually need your brand.
• How capital gets wasted at each stage of a CPG brand's lifecycle.
• Why execution is where most investments fail, not the idea or the founder.
• What the celebrity founder model got wrong, and why copying a formula that worked once rarely works twice.
• What the investments that produced exits at Sonoma Brands had in common.

____________________

If you're building a consumer brand toward exit or evaluating one for acquisition, DealPilot, powered by M&A Science, has the practitioner playbook for CPG exit positioning. Join at mascience.com/membership.

Already a member? The bonus conversation with Keith is live now: boards, earnouts, and the hardest lessons from six years backing consumer brands.

____________________

This episode is sponsored by DealRoom

DealRoom's Buyer-Led M&A™ Summit is Back! Join me at the summit on May 20, a free virtual event hosted by DealRoom covering AI, pipeline, diligence, and integration across the deal lifecycle. Sessions run 11:30 AM to 1:30 PM ET. Register here: https://hubs.ly/Q0496h-s0

____________________

Episode Chapters

[00:00:01] Intro

[00:04:19] Day-to-day across 20+ portfolio companies

[00:05:43] When to lean in and when to stay out

[00:09:28] Pre-LOI landmines that kill deals early

[00:13:26] The CPG brand lifecycle: from first check to exit

[00:16:04] How capital needs change as a brand grows

[00:20:15] Execution is why most investments fail

[00:21:26] Capital allocation as the real test of a founder

[00:23:00] What it takes to position a CPG brand for strategic exit

[00:25:13] Big companies can't incubate brands — why that's your edge

[00:26:23] Why you have to get beyond the corp dev team

[00:29:48] What the investments that worked had in common

[00:33:43] Why investments fall apart after you cut the check

[00:35:16] The celebrity founder trap

[00:39:16] How the Sonoma deal funnel actually works

[00:45:22] What kills a deal at the investment committee stage

Keith Levy, Operating Partner at Sonoma Brands Capital

Keith Levy backed an exit of just under $1B  and a $400M exit using the same five-pillar framework, and he starts with the founder every time. Finance comes last.

As Operating Partner at Sonoma Brands Capital, Keith has spent six years evaluating consumer brands across food, beverage, pet food, snacks, and cosmetics. Before that he was CMO at Anheuser-Busch through the $52B InBev deal, president of Royal Canin USA for Mars, and the strategic acquirer who led the Kind acquisition at Mars Wrigley. He knows what the data room doesn't show you, and this conversation is built around that gap.

The first of two episodes covers the full five-pillar CPG diligence framework and the Touchland and Boon's case studies. The second episode, out the following week, covers CPG brand lifecycle, exit positioning, and capital allocation. 

 What You'll Learn

• Why the founder evaluation comes before the financials.
• How to read product-market fit the way an operator does, not a financial analyst.
• What a credible go-to-market strategy looks like vs. one that crashes in execution.
• Why supply chain control is now a diligence requirement, not an afterthought.
• How to get the right operators inside a strategic acquirer interested before a banker calls.
• The Touchland case study: under $1B exit in less than two years
• The Bachan’s Japanese BBQ sauce case study: ($400M) exit with McCormick at the table.

____________________

If you evaluate consumer brand investments and want a framework for the risks the model won't surface, DealPilot, powered by M&A Science, has the practitioner playbook. Join at mascience.com/membership.

Already a member? The bonus conversation with Keith is live now: boards, earnouts, and the hardest lessons from six years backing consumer brands, exclusively for M&A Science members.

____________________

This episode is sponsored by DealRoom

DealMax starts Monday.
Find us at the Aria
DealRoom: Booth 109,
M&A Science: Booth 208.

Kison will be signing copies of Buyer-Led M&A all three days, and we've got a candy bar and swag worth stopping for. Then, join us monday night for a happy hour, RSVP here: https://hubs.ly/Q043VnNH0

____________________

Episode Chapters

[00:00:00] Intro

[00:02:02] Keith’s background overview (24 years at AB, $52B InBev deal – narrated)

[00:05:40] Running Royal Canin and joining Mars / Mars Wrigley

[00:08:45] Why Mars acquired Kind

[00:09:15] What is Sonoma Brands and how Keith got there

[00:10:17] The Budweiser CMO era & favorite ads

[00:15:12] The Mars / Wrigley China integration

[00:23:15] How Sonoma Brands evolved from venture to growth equity

[00:25:11] Why deals don’t work and what Sonoma changed

[00:27:12] The Keith Levy CPG diligence framework

[00:30:04] How to evaluate a founder

[00:35:40] What product‑market fit actually looks like

[00:38:32]  Touchland: under $1B exit in two years

[00:39:05] Go‑to‑market: sequencing channels & steady growth

[00:41:10] Why TAM is just a sniff test

[00:43:31] Why how you make the product matters more than you think

[00:47:08] The real value an operating partner brings

Matt James, EVP, CFO & Chief Acquisition Officer at Oakbridge Insurance

Roll-up platforms that skipped real integration are getting exposed when they go to market. Buyers want proof of organic growth, clean data, and a platform that actually functions as one. A lot of processes are breaking down because those proof points aren't there.

Matt James co-founded Oakbridge Insurance in 2020 and has since closed 60+ acquisitions, integrating 100% from day of close. This conversation covers how he built that system, what went wrong with billion-dollar competitors, and what he would fix first if he walked into a revenue-aggregating roll-up right now.

 What You'll Learn

• Why multiple arbitrage is gone, and what buyers are scrutinizing instead
• How Oakbridge evaluates cultural fit before any financial criteria
• What a failed billion-dollar roll-up sale process looks like from the inside
• Building integration continuity from LOI through 90 days post-close
• How distributed equity drives buy-in across an acquired organization 

If you're evaluating targets and want to know if they're integration-ready pre-LOI, the Intelligence Hub can help you score cultural fit, data readiness, and technology maturity. Join the professional membership at  mascience.com/membership.

____________________

This episode is sponsored by DealRoom

DealRoom's State of M&A Report gives you data to back up your M&A priorities.
The State of M&A Report reveals the gap between what teams think matters and where the real bottlenecks are.
Download it now to get expert insights: https://hubs.ly/Q03ZxRvD0

____________________

Episode Chapters

[00:03:00]  Introduction & Matt's Background

[00:05:00] How Buyer Diligence Has Shifted

[00:06:00] Organic vs. Inorganic Growth and Why It Matters

[00:11:00] The Four-Criteria Deal Evaluation Framework

[00:14:00] Validating Cultural Fit Before LOI

[00:17:00] Deal Structure: Equity, Earnouts, and Alignment

[00:20:00] What Billion-Dollar Platforms Got Wrong

[00:26:00]Building the Integration System at Oakbridge

[00:31:00] Bridging Diligence and Integration

[00:38:00] Data Infrastructure: Databricks, Power BI, and Why It's Worth It

[00:45:00] Building Proprietary Deal Flow

[00:52:00] First Moves When Integration Is Broken

Dan Caruso, Managing Director, Caruso Ventures; Founding CEO of Zayo Group

This is Part 2 of our conversation with Dan Caruso, founder and former CEO of Zayo Group. Be sure to start with Part 1. It covers the Zayo thesis, deal sourcing, structure, and the negotiation playbook, whereas this episode picks up at the execution.

Part 2 is about the equity value-creation framework Dan built at Zayo, applying the same IRR math PE firms use for their portfolio companies to daily operating decisions. It replaced budgets and tied every compensation decision to a single equation. It ends with the exit and how Dan put together a competing bid after a buyer consortium locked up the debt market.

What You'll Learn

• How Zayo's integration process matured across 45 deals +  where it broke post- IPO
• The equity value creation model: the IRR metric that replaced budgets and tied compensation to a single equation
• Negotiation tactics: countering lower, manufacturing urgency, and splitting the CEO from their investor at the table
• Culture during integration: one culture, take it or leave it
• IRR compression as a sell signal and how Dan acted on it before most saw it coming
• The sell process: engineering a competing bid after buyers locked up the debt market
• The ICG deal: $8.7M in, $250M out, 18 months

Want to apply Dan's framework to your own business? The Intelligence Hub has the Equity Value Creation Operating Model, a step-by-step guide to replacing budget-based management with IRR as your operating compass. Access here. 

____________________

This episode is sponsored by DealRoom

M&A Science is heading to ACG DealMax in Las Vegas, April 27–29 and we'd love to see you there. Stop by the booth for a book signing, swag, and a look at what the M&A Science and DealRoom teams have been building.
Learn more and save the date: https://hubs.ly/Q043VnNH0

____________________

Episode Chapters

[00:02:28] Public company vs. private: what changed about deal execution.

[00:03:40] Negotiation tactics: countering lower, manufacturing urgency, the CEO-investor wedge. 

[00:08:15] Integration maturity: how execution evolved across 45+ deals.

[00:18:43] Culture: join us or don't. 

[00:20:35] Going public: super voting shares, activist investors, and the PR game Dan skipped. 

[00:24:40] Post-IPO talent drain and what Dan would restructure in management equity. 

[00:29:26] When to sell: reading value compression. 

[00:33:03] The sell process: competing bid against a cornered debt market.

[00:39:18] The equity value creation model: replacing budgets with IRR.

[00:43:29] IRR as a real-time operating metric. 

[00:49:50] Cruso Ventures, quantum, space, and Boulder Roots Music Fest.

[01:01:06] The ICG deal: $8.7M in, $250M out

Dan Caruso, Managing Director, Caruso Ventures; Founding CEO of Zayo Group

Dan Caruso built Zayo from a startup into a $14B+ bandwidth infrastructure platform through 45 acquisitions. In Part 1, he walks through the full buyer-led playbook: how the thesis was built on a contrarian bet that everyone else got wrong, how proprietary deals were sourced through early relationship-building, and why fast integration wasn't a reputation problem — it was a competitive advantage. 

He also breaks down the metric trap most roll-up operators fall into: mistaking EBITDA growth for true value creation. If your board is tracking acquisitions individually or your deal structure is loaded with earnouts, this conversation will challenge how you're running the program.

What you'll learn:

• How to identify and build a contrarian acquisition thesis with investor alignment
• Why proprietary deal flow is a brand and relationship problem, not a sourcing problem
• How Zayo executed an unsolicited, fully funded offer on a larger public company — and won
• Why tracking individual acquisitions kills synergies in a roll-up
• When earnouts hurt more than they help — and what to use instead
• How clean, all-cash offers win on certainty, not price

Dan's approach to thesis validation, investor alignment, and platform value creation is documented in the Roll-Up Readiness Assessment inside the Intelligence Hub, a stage-gated guide built directly from this conversation. Access inside the Intelligence Hub — → Access inside the M&A Science Hub — members only.

This episode of M&A Science is presented by DealRoom.

DealRoom just automated Pipeline Management with AI so you can spend less time updating deals, and more time working them. Automatically push deal context from Outlook to DealRoom Pipeline and use AI to keep deal target data and tasks updated, so follow-ups never slip through the cracks. No manual logging. No stale pipeline data.

See for yourself: https://hubs.ly/Q045fXp50

____________________

Episode Chapters

[00:02:00] Introduction: Dan Caruso and the Zayo Story

[00:03:51] Background: From Ma Bell to MFS to Level Three

[00:08:58] Lessons from WorldCom: What Fake Value Creation Looks Like

[00:10:35] What First-Time Acquirers Get Wrong

[00:12:39] Building the Zayo Thesis: Fiber Orphans and Accidental Owners

[00:17:20] Raising Capital When You Have a Track Record

[00:23:50] What Must Be True for the Thesis to Work

[00:26:54] Why EBITDA Doesn't Measure Value Creation

[00:29:15] The Danger of Tracking Acquisitions Individually

[00:31:17] What Actually Drove Zayo's Success

[00:36:10] Convincing Sellers: Proprietary Sourcing and Relationship Strategy

[00:45:30] The Above Net Acquisition: Unsolicited, Fully Funded, at a Conference

[00:51:02] Negotiation Tactics: Unpredictability, Silence, and Team Play

[01:02:16] Deal Structure: Why Zayo Avoided Earnouts

[01:03:56] Clean Cash Offers and Certainty of Close