Beer is big business, and over the past few years, the world’s top brewers have been increasing acquisitions and consolidating throughout the market. Together, the world’s six largest brewers have made 55 acquisitions and 10 investments in the private market since 2013. Many of these deals have focused on product line expansion, mainly targeting craft beer but also adjacent categories, such as cider and soft drinks. Entering new geographies has also been a key driver behind top brewers’ activity. All of these growth strategies mean one thing for craft beer business owners: There could be significant demand for your business and if you’re considering a sale.
Define your strategy
With all of the consolidation in the industry, odds of your brewery being acquired are high. But, what does that mean for you and your business? What do you want this acquisition to do for you? What does the combined entity look like and what is the growth potential? All of these questions should be asked and answered when creating your strategy for the acquisition. Understand the capital you wish to receive and the role you want (or do not want) in the new, combined organization. Defining these key criteria ensure you find the best deal for your business and maximize its value.
Get a team of experts behind you
Many craft beer brands that have made it big started out as a business of passion. If your craft brewery has grown to the point of sale, going through the M&A process alone, without a team of experts, can put you at an inherent disadvantage. The ins-and-outs of selling your business can eat into the already packed day of an entrepreneur running their day-to-day.
Know your most important number: your profits
How much a company is worth is determined by its profits. While high revenue is good, it is not the key gauge of business health or growth. Craft beer businesses should use the tried-and-true method of examining profits over the past three years to tell if they’re in their prime. A company with a consistent trend of growing profitability is in the best position to sell.
Choose investors that are actually invested
Focusing on the valuation or the sale price of your craft beer business is short-sighted. Investors should be exactly that — invested. They should provide growth capital and share your vision for growth and strategy for your company, and they will be looking for a partner that adds to their business as well, such as a type of beer or market segment you’ve successfully tapped into. M&A is easily likened to marriage — your “partner” should complement you and make your business more complete. And of course, actually liking them is a big help.
Get ready to get personal
Investors will want to dig into every last detail of your business before they buy it. They’ll want to see proof of your profits, and they will inspect your financials, talk to employees, talk to customers and try to find areas of weakness or risk. Start getting your books and records in order now, and the process will go much smoother and much quicker.
Dena Jalbert, founder and CEO of Align Business Advisory Services.