Food for thought: a partnership with Goldman Sachs may be Chuck James' ticket to increasing diversity in food industry.

Here's some food for thought, "If you can't beat 'em, buy 'em." That's exactly the strategy Charles "Chuck" James III is employing as he retakes the reins of his 120-year-old family business, C.H. James & Co.

In July, James announced a partnership with Goldman Sachs Urban Investment Group to assess potential acquisition opportunities in the food processing industry, targeting companies with revenues of $50 million or more.

The 43-year-old businessman says the time is right for his move. "The capital is there, the demand is there, and the talent is there" he says. "And by the marriage of those three elements, I think we can raise the bar here in terms of what we call supplier diversity."

But challenges do exist. While James says corporate giants want to do business with minority firms, there is a caveat because suppliers must "have the scale to support them in larger form:' Harriet R. Michel, president of the National Minority Supplier Development Council (NMSDC), agrees, noting that while minority businesses are capable of handling smaller contracts, they often have difficulty when they try to meet "the requirements of a very large contract."

Through venture capital provided by Goldman Sachs, newly acquired businesses will be certified as minority business enterprises and be able to compete for substantial market share. The first transaction is expected to close within the next calendar year.

Through divestiture candidates and "speaking to some of the leading QSR [Quick Serve Restaurant] companies about acquisition opportunities of suppliers" says Kevin Jordan, vice president of Goldman Sachs, "We're going to cast a very wide net and use the relationships with both Chuck and his firm and [ours] to find as many opportunities as possible,"

Michel says their approach is right on target. "The best way to build a large company is through acquisition. And in this kind of marketplace it's very difficult to start with a small firm," site says. "'So it allows minority firms to grow larger exponentially through acquisition."

James and Goldman Sachs will determine if a company will retain its name on a case-by-case basis. "If the company has a recognizable name," says James, "they may keep the name. Otherwise, it may come under the C.H. James [umbrella]."

James has successfully run several companies in the food industry including North American Produce, ProduceOnline and most recently PrimeSource Food Service Equipment (No. 30 on the BE INDUSTRIAL/SERVICE 100 list with $139.9 million in sales). At press time, James was negotiating to sell his 51% stake in the company, Prime Source, which he acquired from North Texas Opportunity Fund in 2001 for an undisclosed amount. His distinguished track record enabled him to close the deal with Goldman. "[Chuck] serviced really some of the most demanding companies out there like McDonald's, Yum! [Brands], Darden [Restaurants], where you really live or die everyday by the quality of your service, the quality of your product, and your ability to keep the most demanding customers in the world happy," Jordan says.

With the minority population and purchasing power steadily increasing "it makes good business sense" to do business in minority communities," says James. "Minority businesses can help larger companies understand the nuances of our market and tailor product to better meet our needs." James says they will also create jobs for African Americans.

While James' model focuses on the food industry, he says it "can be extended across all industries." The NMSDC will be monitoring the deal to see if it is a viable option for other industries. According to Michel, "If anybody would be likely to be in a leadership position on how to respond to a 21st century market, it would be Chuck."