Butterfly and Graham Partners agree investment in Custom Flavors

Butterfly Equity and Graham Partners have agreed to invest in Custom Flavors, a San Clemente, California-based producer of liquid and powdered sweet flavors, according to PE Hub. The transaction adds Custom Flavors to a newly formed flavor investment platform that also backs Target Flavors, a Graham Partners portfolio company.

The deal brings together two private equity sponsors around a business founded in 2000. PE Hub reported that Custom Flavors will continue to be led by chief executive Alex Wendling, with support from co-founders Mike Wendling and Steve Bishop.

The investment structure places Custom Flavors alongside Target Flavors, which PE Hub described as a flavor house serving the beverage, dairy, dairy alternatives, pharmaceutical and bakery industries. In private equity, a platform is typically used to group an initial operating company with related assets or acquisitions under a common investment strategy. In this case, PE Hub said Butterfly and Graham have created a flavor investment platform backing both Custom and Target.

Custom Flavors operates in the sweet flavors segment, supplying liquid and powdered products. The report did not state the size of the investment, ownership percentages, valuation or expected closing timetable.

Management continuity

The continuation of Custom Flavors’ existing leadership gives the investors a management team already tied to the company’s operating history. Alex Wendling will remain chief executive, while co-founders Mike Wendling and Steve Bishop will continue to support the business, PE Hub reported.

For Graham Partners, the platform extends an existing position in the flavor market through Target Flavors. The company serves a range of end markets, including beverages, dairy products, dairy alternatives, pharmaceuticals and baked goods, according to PE Hub.

Butterfly Equity is joining Graham Partners in the investment. PE Hub identified both firms as investors in Custom Flavors but did not provide further detail on their respective roles in the platform or governance arrangements.

The reported transaction reflects continued private equity interest in ingredient and formulation businesses that supply consumer and health-related product categories. Based on the details reported by PE Hub, the immediate operational change is the formation of the platform structure rather than a disclosed change in day-to-day leadership at Custom Flavors.

This story draws on original reporting from PE Hub.