When it comes to businesses with longevity, a deep history in their markets, and incredible growth potential, it’s hard to go past window coverings manufacturer and retailer Hunter Douglas. A family-owned and run business that traces its roots back to 1919, the company has grown to be the No. 1 global player in its market. So it was with some surprise that the family-run business was acquired by a private equity firm in 2022. But even a quick look at the deal with 3G Capital reveals this was no typical private equity deal, nor a family cashing out. The Hunter Douglas-3G deal looks more like a partnership set to provide stewardship and continuity with continued founding family involvement, setting the company up well for long term growth and further global expansion.
Over the past hundred years, Hunter Douglas has always invested strategically, with the goal of strengthening its core business and growing throughout its value chain and market channels. It has become the most widely recognized name in the industry with unmatched consumer brand awareness and a diversified product offering and channels such as e-commerce.
When 3G Co-Founder and Co-Managing Partner Alex Behring and his team were looking to add another company to its portfolio, the firm saw not only a formidable and popular brand that had proved its longevity, but also a company with strong organic and inorganic growth potential across multiple geographies and channels. It saw an opportunity to collaborate closely with family leadership to help a prized consumer brand grow to even greater heights.
“3G Capital has deep respect for Hunter Douglas, its diverse portfolio of brands and the steadfast leadership of the Sonnenberg family over three generations. We are honored to be partnering with the Sonnenberg family and to work with Hunter Douglas’ management team on the company’s next phase of global expansion,” said Daniel Schwartz, Co-Managing Partner and Alex Behring, Co-Founder and Co-Managing Partner of 3G Capital.
The 3G Capital Partnership With Hunter Douglas
In February 2022, 3G Capital acquired a 75% stake in Hunter Douglas, with the founding Sonnenberg Family continuing to hold a 25% interest in Hunter Douglas. The deal valued Hunter Douglas at around $7.1 billion.
“Hunter Douglas was founded by my Father over 100 years ago and has grown into a global leader due to our commitment to innovation, entrepreneurial culture, leading brands and world class management,” said Ralph Sonnenberg. “3G Capital is a well-renowned investor, operator and a strong partner for our business.”
For 3G and Alex Behring, it was the firm’s first new platform investment in several years and embodies what the company seeks as long-term investors and operators — a fundamentally strong, easy-to-understand business that demonstrates solid leadership, matched with a resilient business model.
Unlike most private equity shops, 3G doesn’t sweep up as many companies as it can to create large, diverse portfolios. Instead, its investment goals and operational model resemble far more the family businesses it acquires. In fact, in its nearly 20 years, 3G has only acquired a few major businesses: Burger King and its restaurant brands, H.J. Heinz and Hunter Douglas.
With Hunter Douglas, it’s been widely reported that the transaction was sourced through an existing relationship with the founding Sonnenberg family, who choose 3G as its partner of choice based on the firm’s reputation as long-term operators.
The family behind this crown jewel family business chose 3G and Alex Behring, yet they could have chosen anyone out there with capital. Capital is widely accessible in today’s environment for deals.
It was due to a track record of investing for longevity and care for the brand and its people that Hunter Douglas leadership chose 3G. The other partner with which 3G has done deals is Warren Buffett and Berkshire Hathaway, both in the case of Kraft Heinz and 3G’s Restaurant Brands International.
Berkshire Hathaway helped finance 3G’s deal between Burger King with coffeehouse Tim Hortons, whereas with Kraft Heinz, Berkshire Hathaway was more of a direct partner. In the past, regarding 3G, Buffett has said “I tip my hat to what the 3G people have done,” Buffett said.
3G’s Leadership Transformation Model Is Collaboration
Straight after the transaction closed, Alex Behring and 3G appointed a highly experienced management team of 3G partners and existing Hunter Douglas executives. The best-of-both combination is designed to lead Hunter Douglas into its next phase of growth and operational improvement. 3G Capital appointed João Castro Neves, a Senior Partner at 3G Capital to serve as Hunter Douglas Group CEO.
“3G Capital and Hunter Douglas share a strong belief in durable value creation through operational excellence, entrepreneurship and a culture of meritocracy,” said João Castro Neves, 3G Capital. “I look forward to working closely with David Sonnenberg and the Hunter Douglas management team as we accelerate Hunter Douglas’ growth in partnership with our remarkable founders, managers and business partners.”
With an eye to the continuity that has helped the company rise to its present heights, the Sonnenberg family continues to hold a 25% interest in Hunter Douglas and David Sonnenberg, son of Ralph stayed on as executive chairman.
“As a private enterprise, Hunter Douglas will have the opportunity to advance and expand our business while preserving the family-led culture and strong relationships with stakeholders which have been core to our success,” said David Sonnenberg.
Alex Behring, 3G and the Sonnenbergs seem to be working hand in hand as partners.
3G’s Investment Perspective Sees Private Equity Through a Different Lens
Prior to the Hunter Douglas purchase, it was easy but simplistic to peg 3G as a firm that invested in food and restaurants, with Kraft Heinz, Burger King and Tim Hortons being its best-known brands. Yet the categorization belied the deeper investment strategy that 3G follows.
From its track record, 3G is an investment firm focused on good businesses with deep, deep moats,” said Behring, adding that while most companies only exist for about 30 years, 3G looks for companies with long histories — a quality baked into many successful family businesses.
For 3G and Alex Behring, the investment strategy seems to center on an essential philosophy: Big brands, when cherished, when grown, and when appropriately looked after, can be very powerful, long-term businesses.
An analysis of the companies in 3G’s portfolio seems to point to one key denominator. And it’s not a focus on food or restaurant companies. Instead, it seems to be on companies with a particular longevity that are forward-looking. 3G is not a firm that is going to buy a technology company that can be completely disrupted or disintermediated in a few days. Instead, it seems to like businesses with long track records and that perform through economic cycles for long periods of time.
A common trait in all the firm’s assets seems to be companies that have the potential to endure with well-known brands. In fact, there seems to be no better example than Hunter Douglas.
Growth Factors and Future Prospects for 3G and Hunter Douglas
International expansion is also something 3G has always been focused on.
Since 3G acquired Burger King the company has seen material international expansion taking the companies brands into more than 30 new countries and infilling existing countries. Originally, Tim Hortons was nearly only in Canada, yet there are now around 700 Tim Hortons in China for example.
Hunter Douglas is barely scratching the surface internationally in areas like Latin America and Asia. For 3G, Hunter Douglas’s brand and its consumer reputation seem to have been big draws.
Additionally, 3G’s acquisition of Hunter Douglas serves as an illustration of how sustainability and sound investment decisions can merge harmoniously. Hunter Douglas offers a range of innovative products that grant homeowners the ability to effortlessly regulate natural light and heat, leading to a notable reduction in energy consumption and costs. Hunter Douglas products provide insulation and temperature management, with strong energy saving paybacks. By leveraging Hunter Douglas’ products inherent benefits, 3G not only secures a competitive advantage but also invests in a more sustainable future.