It’s one of the stranger corporate marriages: Manischewitz, whose syrupy wine has enlivened generations of Passover tables, has been acquired by an affiliate of Mitt Romney’s old firm, Bain Capital. The press release says, rather drily, that Sarkaty Advisors, LLC has “secured a strategic investment” in Manischewitz. What this really means is that investment bankers now own the company and God only knows what they’ll do with it.
Rabbi Dov Manischewitz founded the business in 1888. At the time, matzo-baking was a laborious affair, further complicated by the halakhic stipulation that a matzo had to be made within 18 minutes. Rabbi Dov, however, figured out a way to mechanize the process and keep it kosher, making him the Henry Ford of the matzo business, although presumably without the antisemitism.
Eventually the company branched out into other kosher comestibles like macaroons, gefilte fish, crackers and the (in)famous wine. It stayed in family hands until 1990, when it was bought by a private equity group that included one firm with the ominous name of Harbinger. By 2014, Manischewitz had acquired other leading kosher brands like Carmel, Rokeach and Mrs. Adler’s, making it arguably the leading kosher foods brand in America, although why anyone would want to argue about that is beyond me.
It’s amusing to consider that a firm once run by America’s most famous living Mormon has bought out a venerable purveyor of kosher foods. The question is, Why? Of course, no company ever acquires another unless there’s money in it. But the concept of profit is a little slippery when discussing companies like Bain and Sarkaty.
An investment banker told me that the deal would likely go one of two ways. “[The first is] turnaround, when they fix a company that’s not doing well. The profit margins go from two percent to ten percent and then they sell it.” The downside is that this usually involves painful layoffs and plant closings.
It’s a crappy scenario, but the second way is downright “disgusting,” as my banker friend put it. This is when the new owners “extract as much current value as possible. Let’s say you buy a company for $50 million. You load it up with $40 million worth of debt, and you take that money, and then you sell it for $20 million.”
The whole thing demonstrates a kind of evil genius in a number of ways. First, because the $40 million that you’ve pocketed is actually money that you borrowed to buy the company. Second, meanwhile you’re charging the company millions of dollars in “management fees” (hence, I’m guessing, Sarkaty “Advisors”). And third, because ultimately it doesn’t matter if the company makes money, loses money or even goes bankrupt—you make your millions regardless.
I have a pretty strong hunch that Sarkaty will go for Plan B. The press release suggests that there is a “rising mainstream interest in kosher foods,” which there isn’t. And the elephant in the room is that Manischewitz’s products are (how should I put this?) not good. The gefilte fish is insipid, the matzo fit only for brei and the wine is unspeakable—as soon as I knew better I insisted that we drink a good kosher cabernet at seder and leave the Concord Grape for Elijah.
(In all fairness, the wine is now made by a giant beverage conglomerate that slaps a Manischewitz label on the bottle. But the Talmud says that if you put your name on something, you’re responsible for its quality… Actually I just made that up. But it should say that.)
No doubt many will be mulling over the essential question: if the buyout is good for the Jews. The answer, undoubtedly, is, “Yes, if they work for Sarkaty Advisors.” Everyone else involved should be polishing their resumes, while the rest of us hearken to the death knell of a venerable American brand.
