Mergers and Acquisitions

Now more than ever wholesalers need to consider the impact of the consolidation occurring in the beer business!

With escalating costs and declining margins, the trend toward consolidation is again gaining momentum. Suppliers have entire departments devoted to reducing the number of wholesalers and accomplishing their consolidation objectives. Powerful retailers are attacking the three-tier business model with super-efficient warehousing and delivery systems. There is an urgency building to take costs out of the distribution system and add value with larger, more sophisticated wholesalers.

Whether you want to stay the same, buy, sell, or merge businesses or brands we urge you to carefully explore your options. Like it or not, your business is only a small piece of a bigger puzzle. Unfortunately, the way others put the pieces of the puzzle together has a huge impact on everyone. IBG finds you need to objectively evaluate where you “fit” into the picture and take control of your own destiny.

Negotiating the sale, purchase or merger of a distributorship can be a complicated and always tedious process. By retaining IBG, you benefit from experience gained in selling and merging distributorships throughout the country. We are well known for the professional and complete service we give our clients. With our extensive industry experience and many contacts, we are able to negotiate through the many obstacles that can frequently derail the process. We assist you from the beginning of the process until your check clears or we do not get paid. Suppliers, buyers and sellers – all recommend our services.

Determining your true maximum value is difficult and getting top dollar is more complicated and time consuming than people realize.

The confusing part of this is that your business could have several values depending on your circumstances. Each market is unique and our experience and insight into the process can be extremely helpful. After several years of dealing with all forms of consolidation we have learned that beer wholesalers generally fall into one of these value categories. Remember, any business is only worth its ability to make money for you or someone else.

Stand Alone Value – An outside party (out of market) purchases your business. No synergies exist and the value is determined by the ability of the company to generate future cash flows.

Strategic, Contiguous or Horizontal Value – Some synergies can be expected when a wholesaler purchases his neighbor. It usually has some cost savings in G & A but not usually warehousing and delivery.

Synergistic or Vertical Value – One wholesaler buying another in the same market. Savings are created through closing of warehouse(s) and the reduced number of people and equipment needed. The seller should receive a premium price.

Brand or Break Up Value – Individual brands are purchased by more than one competitor sometimes resulting in increased value because the parts may be worth more than the whole.

Timing is critical. When or if you allow your business to be put into the puzzle is one of the most difficult decisions a wholesaler will ever make. If you decide to stay the course you should know the risk of gaining or losing
value. While the economics of this decision are important we realize that personal, family, and outside influences often dictate timing. The difference between the environment today and the past is the speed and unusual number of ways circumstances can change.