I used to trade the paper claims on these things, and I know exactly how little the men in that building think about the men in the field. They bought an 1852 California company in 2017, doubled its revenue — mostly by acquiring other people’s businesses, not by making better syrup — and are now selling it for about a billion dollars, as Ben Dummett and Lauren Thomas report for The Wall Street Journal. The workers in the plant, the farmers in the field, the diner owner down the road who buys the case — none of them will see a dime of the gain. The people who did it call it growth.
Let me give the deal its due. Paine Schwartz, the firm selling, is a specialist in food-and-agriculture investing. They bought a mid-market ingredients company that had been around since 1852 — one hundred and seventy-four years before the present deal — and they did what private-equity firms are paid to do. They consolidated it, acquired complementary businesses, including some operations offloaded by Hormel Foods, and nearly doubled its top line in nine years. By the standards of investor return, this is a job well done. The trend is not idiosyncratic. Over the past two months, CVC has agreed to buy the food-ingredients business of International Flavors & Fragrances for more than four billion dollars, and Ingredion has paid $3.6 billion for the British firm Tate & Lyle. The ingredients trade is being repapered at speed, and the recent CVC bid for the Italian ingredients maker Irca sits squarely in the same pattern.
The honest steelman: mid-market food companies need capital to consolidate or die, and without outside money a company like Lyons Magnus becomes a footnote. I will not pretend otherwise.
But the steelman is the deal’s own story about itself. Walk through the actual mechanics. The 2017 buyout was financed with debt loaded onto Lyons Magnus itself — that is how private-equity purchases are done, has been done since the 1980s, and will be done in 2030. The company now owes what it owes, and the interest payments come out of operating cash that would otherwise have gone to plant, equipment, workers, and the long, slow work of building a real institution. The doubled revenue was not produced by a single baker or syrup-maker getting better at his trade. It was produced by acquisitions, which is a different word for consolidation, which is a different word for fewer firms competing in the market. The “growth” the spreadsheet counts is the visible surface of a market that contains fewer independent actors than it did in 2017.
Then the equity appreciation — the billion dollars the deal will fetch — accrues to the limited partners of Paine Schwartz. These are pension funds, endowments, and family offices. They will receive their share of the gain. The workers in the plant will receive their next quarter’s wages. The farmers who grew the fruit that becomes the puree will receive their next contract price, which the consolidated buyer now sets in a thinner market. The diner owner who pours the syrup two-table-at-a-time will receive the next delivery at whatever price the consolidated network charges, without a voice in the setting of it. None of these people are partners in the enterprise that bears their work. None of them have a claim on the billion. None of them were asked.
This is the part the deal’s apologists do not want to discuss, because the conservative objection to it does not depend on a redistributionist politics at all. It depends on the older, more patient observation that an institution like Lyons Magnus — a company that has made things for one hundred and seventy-four years, through Reconstruction, through two world wars, through the great depression, through the long climb of California agriculture — is not a financial instrument. It is an intergenerational trust. It was built by a founder, sustained by generations of workers, supplied by farmers and truckers, served by restaurant and coffee-shop owners who depend on it being there next Tuesday. To treat that trust as a nine-year hold for an exit is to mistake the nature of the thing you are holding. Edmund Burke, who understood what an institution is better than any writer I know, called society a partnership between those who are living, those who are dead, and those who are to be born. The partnership at Lyons Magnus has been running since 1852. The current owners have been running it since 2017. They are about to hand the keys to the next set of owners, who will run it until 2035, and then hand the keys again. This is not stewardship. It is a relay race where the runners don’t know the route and never see the finish line.
The standard reply is that the limited partners — the pension funds and university endowments — need the return. They do. So do the workers. So do the farmers. So does the diner owner. The question is which claim gets honored. The deal as structured honors the claim of the institutional investor and treats every other claim — the worker, the farmer, the rural customer, the small town the plant sits in — as an external cost. The deal’s ledger is built so that the gains accrue upward and the costs are paid downward. That is not a market failure. It is a market operating exactly as it has been instructed to operate, by people who have spent forty years removing every check on that motion.
I do not expect this column to change the trajectory of a billion-dollar deal. The deal will close, the gain will be distributed to the limited partners, the workers will show up on Monday, and the syrup will keep flowing to the diners and coffee shops and hospitals. The board will be reconstituted. A new value-creation plan will be announced. Somewhere in Los Angeles, a new fund will be raised on the back of this exit. The wave of which this deal is part — the IFF-to-CVC trade, the Tate & Lyle absorption, the relentless rolling-up of the ingredients trade — will continue.
What I do expect is that someone, somewhere, will name what was actually built and what was actually lost. An 1852 company is not a startup. It is the long, slow, patient work of building an institution that outlasts any of us. The men who founded Lyons Magnus in 1852 are dust. The men who run it today will be dust. The institution, if it is treated as an institution, can run another hundred and seventy-four years. If it is treated as a yield instrument, it will be flipped again in 2035 and again in 2044, and the workers and farmers and rural customers will keep showing up to make it work, and the spreadsheet will keep counting their work as an input rather than a partnership.
The alternative is not mysterious. It is the cooperative. It is the employee-owned firm. It is the foundation-owned company. It is the structure under which the people who do the work own the means of production, and the gain stays in the place where the work is done. Organic Valley, up the road from me in La Farge, Wisconsin, is owned by sixteen hundred family farms and does about a billion in annual sales; the surplus stays in those families and their communities, not in the hands of a New York limited partner. Land O’Lakes, the dairy cooperative, is owned by its member farmers and did sixteen billion in sales last year. These are not utopias. They are working businesses at scale, governed democratically, distributing their surplus widely, and rooted in the places their members live. They are harder to build than a private-equity flip. They are also harder to dissolve. That is the point.
You cannot flip what the workers own. You cannot lever up what the community holds. You cannot flip a thing whose ownership is distributed and whose governance is local and whose surplus stays in the county. The curse of bigness, as Louis Brandeis named it a century ago, is not only the curse of monopoly; it is the curse of concentration of every kind — capital, decision-making, ownership. The antidote is the opposite. The antidote is the cooperative, the mutual, the credit union, the employee stock plan that actually vests, the structure that makes the institution a partnership rather than a relay race. The diners and coffee shops of Adams County will pour the syrup on Monday either way. The question worth asking is who owns the company that makes it, and whether the place that built the wealth keeps any of it.