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« Tough love from the otherside | Main | Random Thoughts From Chicago »

Another Win-Win Transaction & Beer Wholesaling and Bessie the Cow

Before I start this post Steve Cook and I would like to congratulate ABI distributors Chris Canale and Charles, Ray, and J.R. Hand in their recent transaction, the acquisition of D. Canale Beverage Company in Memphis by the Hand Family Beverage Company.  Steve and I were privileged to represent D. Canale Beverage Company during the process.  A tip of the hat to all parties involved.  Chris decided now was his time to exit the industry and the Hands stepped to the plate and made a significant strategic move which sets the chess board for years to come… a clear win-win for all involved.  Thanks for providing us with the opportunity to participate in your success. Best wishes to all.   

 

 

Now the post Beer Wholesaling and Bessie the Cow… What do beer wholesaling and a good ol’ milk cow have in common?  Let me enlighten.  A distributor I know explains his decision to NOT run towards the exit in a simply analogy.  He’s a high share ABI guy (with willing suitors) but his thinking might fit many out there. 

A good ol’ milk cow has one primary goal… producing milk.  A young cow with a lot of promise has a certain value.  As the cow ages the value probably decreases… but the decision point is whether the value of the milk the cow produces over these years is greater than the decline in the value of the cow.

This ABI distributor accepts the fact that the value of his business might (will?) decline over the next 10 years but will the cash flow produced over this time frame exceed this decline in value? … the milk produced versus the cow’s value.

This distrib is making the bet that the milk will exceed the decline for his business.  It seems a lot of folks are making a similar bet.  Will this be the case?  Only the future will tell.

It’s not an insignificant bet… I had another ABI distributor who responded to my last post, “Tough Love From the Other Side” which can be found here with these comments

John—You should have sent us razor blades with that column...unfortunately we are only one bad Wall Street prediction or one Board of Directors meeting away at any one time from your prediction.  Our financials are in their hands. 

Even with those concerns, guess what bet this guy is making.  He’s an aggressive buyer/consolidator who calls me once a month to remind me he’s in the market to purchase.  He’s betting on the milk to keep flowing even with his very valid concerns.  Like most things in life… you play the game, you take your chances.  Predicting the past is pretty easy… the future?  Not so much. 

As a side note, if there are any ABI folks looking to get out anywhere in the country; please give me a call so I can get this guy off my back.  Sorry John ;-)   And my buddy Steve Cook continues to remind me there is no shortage of qualified buyers; the trick is getting the right match-up.

 

 

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