![]() ![]() By 2014, Kenary and Doyle were in a quandary about what to do with Mass Bay (Ligeti had left in 1990). You may also want to poke around the rest of the website for more information. This great column was sent our way by Rocky Fiore, managing director at Prairie Capital Advisors Inc. However, when all things are considered, ESOP’s present a very compelling tax effective exit strategy that can balance the changing of ownership with the maintaining of control. Most successful craft brewery owners have a multitude of ownership transition alternatives available to them. The craft brew industry has experienced tremendous growth and, as a result, craft brewery owners may be seeking an opportunity to unlock some or all of the value in their business. The ESOP benefit can be a powerful supplement to an employee’s overall retirement savings. ESOP’s are designed to reward employees who stay with the company for a long time (i.e., 10 years or longer). ![]() An ESOP provides this attraction and retention mechanism by giving all eligible employees an equity interest in the brewery. This is particularly relevant to a craft brewery, which many believe its people are its most important asset. Retention and attraction of employees is critical to creating a sustainable business. Regardless of your size, an ESOP is a great solution for owners who want to remain independent and create liquidity at the same time. However, it’s not just the large players on the auction block smaller craft brewers are targets as well. ![]() Conglomerate brewers are beginning to take note and responding by acquiring craft beer brands. The statistics are compelling strong industry growth (18 percent in 2014) combined with an inelastic consumer base makes a great recipe for strong valuations. Owners of these breweries are witnessing strong market activity and may be considering an exit. Strong market environmentĬraft brewers are all the rage. Also, nothing precludes you from implementing a minority ESOP today with plans to sell the brewery to a strategic buyer at some point in the future (i.e., win-win for both owners and employees). As a result, an ESOP is an excellent option for multi-shareholder situations where one owner is seeking liquidity while others want to retain control. An ESOP can provide partial liquidity to one or several shareholders. Depending on the ownership structure or owner timeline, a full sale may not be practical or desired. Controllable liquidityĪn ESOP can be structured to meet a variety of needs for a liquidity event. RELATED: Five business issues to consider before starting a brewery 3. After all, isn’t your independence part of the reason you have come this far? Take note, the ESOP is incapable of running a craft brewery it is simply a vehicle to transition ownership to employees in a very tax advantaged way. An ESOP allows owners the opportunity to monetize all of those years of hard work while keeping the brewery in the hands of the individuals that helped to build it. Some believe that beer conglomerates will pay the highest value for a craft brew business while others feel that “selling out” will potentially damage the reputation and diminish the brand’s appeal. There are polarizing viewpoints on craft brewers selling to beer conglomerates or private equity. Most craft brewers already have engaged employees that are excited about the future of their brewery, and employee ownership is a natural evolution in craft beer culture. One of the most challenging aspects of becoming an ESOP company is engaging employees and getting them to understand what it means to be “employee-owned.” Successful ESOP companies have employees who understand how their day-to-day contributions impact the company. Cultural familiarityĬraft beer employees want their passion and commitment reflected in the brand. Outlined below are the top five reasons why craft brewers should consider an ESOP. ESOPs can be a great exit strategy for craft brewers. These breweries chose to implement an Employee Stock Ownership Plan (ESOP). Which path should you take? Harpoon, New Belgium, Odell, Left Hand and many others walked a different path. Liquidity options are plentiful for owners of craft breweries: strategic sale, private equity, management buyout, family transfer, leveraged recapitalization. ![]() Just all of the Harpoon Brewery owners here. ![]()
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