NEW YORK, N.Y. – When Tessemae’s salad dressing quickly became a hit, the owners of the family-run condiment company were faced with the reality that they needed help navigating the grocery business.
The company based in Annapolis, Md., got its start in 2009 selling dressing to a local Whole Foods and then worked its way into five stores. By last summer it got into the chain’s nearly 375 locations. In October, it reached Safeway stores in Northern California and was on its way to a national rollout of 1,100 stores.
Success brought challenges. A firm Tessemae’s hired to help raise money from investors wasn’t up to the task. The company had contracts to buy ingredients that were priced too high and it didn’t have enough cash to fund its growth. It needed help figuring it all out.
Enter Michael McDevitt, CEO of Tandem Legal Group, a law firm that advises companies on strategy.
“They were going to succeed, they had all the grit, all the tenacity in the world,” says McDevitt, the former CEO of Medifast, a nutrition and weight loss company. “They had massive product demand, but an inability to satisfy that demand.”
McDevitt helped Tessemae’s work through its problems, and also became an investor.
One of Tessemae’s problems was the firm it hired to court investors, CEO Greg Vetter says. The sales presentation the firm put together exaggerated Tessemae’s sales prospects by tens of millions of dollars. Investors didn’t buy it and Vetter wanted out of the contract. The company had previously sought help from its law firm, but the attorneys didn’t make it a priority. Tessemae’s also wanted to renegotiate contracts with suppliers. The contracts were priced for smaller quantities of ingredients like olive oil, and didn’t give discounts for larger purchases.
Tandem ended the contract with the fundraiser and renegotiated supplier deals.
Meanwhile, Tessemae’s bank refused its request for a $1 million credit line increase. The company needed the money to fund its expansion into more Safeway stores.
McDevitt decided to invest in Tessemae’s and recruited other investors. He and former Medifast colleague, Brendan Connors gave the bank a guarantee so Tessemae’s could get the credit line increase. Tessemae’s got $4.5 million to fund its growth.
“We pointed them in the right way,” McDevitt says.