Tate's Bake Shop in Southampton on July 14, 2012.

Tate's Bake Shop in Southampton on July 14, 2012. Credit: Ian J. Stark

Tate's Bake Shop Inc., an upscale Southampton cookie maker, has sold a majority stake to a private equity firm -- one of whose partners discovered its cookies before investing in the company.

The deal includes Tate's, which has manufacturing facilities in East Moriches, and its sister companies, Tate's Wholesale LLC, Cookie Commissary LLC, and Kathleen N. King Inc. Their baked goods are distributed across the country.

Private equity firm Riverside Co., with co-headquarters in Manhattan and Cleveland, declined to provide terms of the deal. A financial news service owned by Thomson Reuters, peHUB, quoted a source who put the price at about $100 million.

Alan Peyrat, a partner at Riverside who spearheaded the deal, said Tate's founder Kathleen King and her management team would keep running the business with about 200 employees.

"She's going to continue to do the things she's focused on in the past, product development and quality," he said. "She continues to be the face and the spirit of the brand."

The investment comes through the Riverside Micro-Cap Fund III, which has $350 million in equity.

Peyrat said Riverside, unlike other private equity firms that seek to repair distressed companies, pursues "the best companies in their niches" and seeks to help them grow faster.

Tate's is "the best packaged-cookie company in the United States," said Peyrat, who used a research firm to conduct consumer taste tests before committing Riverside's money.

Other investments by Riverside include California-based dating service It's Just Lunch, and Crioestaminal, a Portuguese company that preserves umbilical cord stem cells for possible future medical use.

Peyrat said he encountered Tate's thin, crispy cookies when his children needed a snack as they went surfing during a vacation at Huntington Beach, California.

"My family loved it," he said. "I was already predisposed to the company" when an investment proposal "landed on my desk."

Tate's baked goods are distributed through supermarkets and specialty stores in more than 40 states, according to the company website, but Peyrat said Riverside plans to expand distribution channels and consider advertising.

Tate's products include its signature thin, crispy chocolate chip cookies and a growing line of gluten-free baked goods.

In 2006, King struck a deal with Empire State Development to receive tax credits and other benefits for committing to hire 50 workers by 2012.

Manhattan-based TM Capital Corp. was hired by Tate's to seek buyers, and Riverside was advised by law firm Jones Day and consultancy Deloitte LLP.

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