Consumer-focused private equity firm Monogram Capital Partners LLC has sold Western Smokehouse Partners to AUA Private Equity Partners LLC after boosting the better-for-you meat snacks manufacturer’s Ebitda by 4.5 times over the past four years, The Deal has learned.

Founded in 1978, Greentop, Mo.-based Western Smokehouse makes premium branded, private label and co-manufactured meat snacks such as zero-sugar meat sticks and bites, strips and more made from natural ingredients. Monogram, which typically invests $20 million to $50 million in companies with $5 million to $50 million in revenue, acquired Western in 2018.

AUA, which owns businesses such as Raymundos Food Group LLC, Epic Baking Co. and Tijuana Flats Restaurant Group, tends to invest $20 million to $75 million in businesses with over $5 million in Ebitda and $20 million to $75 million in enterprise value, according to its website.

The transaction, announced March 27, returned a substantial portion of Monogram’s $152 million first fund, according to a source familiar with the matter. Monogram declined to comment on the return and the company’s financials.

Between 2018 and 2022, Monogram invested in scaling Western’s footprint from one manufacturing facility to four throughout the Midwest, invested in a new management team and in January 2020 added on Galesburg, Ill.-based Thrushwood Farms, one of the largest better-for you contract manufacturing and private-label meat snacks business.

When Los Angeles-based Monogram acquired Western, which sells products under the Western’s Smokehouse brand, the business already had a branded products division and was contract manufacturing, or developing and producing customized products, for other meat snacks brands. The firm doubled down on building market share in contract manufacturing and packaging and made inroads with private label, which typically involves brands and retailers selecting rom an existing lineup of products to sell under their name.

“Western had really great intellectual property and nailed the ability to make these natural sticks in a way that no one else had been able to do, at least at scale,” Monogram Capital co-founder and partner Jared Stein told The Deal. “But oftentimes, supply demand imbalances, especially in these kind of hyperspecialized manufacturing processes, are hard to bridge because the process of creating a natural meat stick without all of the inclusions and preservatives is actually quite difficult to scale up.”

Monogram took a contrarian approach by launching a sale process in the current market environment, when many brands have retreated from the auction block due to economic uncertainty and the potential for lower valuations. But the firm was starting to get interest in the company from upstream sponsors as well as strategics.

“There’s been a dearth of really premium, best-in-class assets on the block lately, and if you go to sell a phenomenal business that’s got line of sight to growth, you’ll get a premium for that,” Stein said. “Ultimately, it played out in the way we were hoping, and we had a pretty heated auction dynamic.”

While meat snacks, especially jerky products, is a more established market now compared with 2018, there is more room for growth, according to Stein.

Consumer demand for jerky snacks has spread to other types of meats such as turkey while greater adoption of these products at convenience stores and other formats has made retailers themselves interested in launching store brands. Strides in packaging these meat snacks, such as multi-packs, family packs and perforated boxes, have also helped boost their presence at retailers.

Businesses like Western, which can cater to a broad swath of the category as a developer and manufacturer, have an advantage, according to Stein.

“It’s hard to know how the branded side of some of these landscapes will play out because it is hypercompetitive and they’re all going after similar shelf space, but if you can find a second derivative way to play the category growth in a more diversified, brand agnostic way, that’s extremely valuable,” he said.

The firm, which has invested in brands such as beauty brand Live Tinted, retailer Foxtrot Ventures Inc. and better-for-you soda maker Olipop Inc., continues to be interested in manufacturers similar to Western in the food and beverage category.

Monogram and Western Smokehouse turned to Harris Williams & Co. for financial advice on the deal and Massumi + Consoli LLP for legal counsel.

Editor’s note: The original version of this article was published March 27, 2023, on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.