{"version":"1.0","type":"rich","provider_name":"Acast","provider_url":"https://acast.com","height":250,"width":700,"html":"<iframe src=\"https://embed.acast.com/$/62301a5c63c97500122f8a76/6acbb96068b7ce6ffbcc4bac?\" frameBorder=\"0\" width=\"700\" height=\"250\"></iframe>","title":"When you need a friend, winery M&A w/ Erik McLaughlin, Metis","description":"<p>Coming from the winery operator world and having sold a winery, everyone asked Erik McLaughlin how he did it. That led to the founding of <u><a href=\"https://www.metis-advisors.com/\" rel=\"noopener noreferrer\" target=\"_blank\">Metis</a></u>, a wine industry specific M&amp;A advisory firm. Erik discusses the state of wine industry M&amp;A, what an M&amp;A advisor does, and what needs to happen to get the wine industry back on track. </p><p><br></p><p>Detailed Show Notes: </p><p><br></p><p>Erik’s background: 20 years as a winery operator, sold winery to Crimson and then started M&amp;A firm 10 years ago</p><p>Metis started as a division of Exvere bank, but then split off independently</p><p>M&amp;A firms buy and sell businesses / wineries vs selling assets, which a real estate broker does (Metis also has this)</p><p>Fall 2026 is the most challenged time in Erik’s 30 years in the wine industry</p><ul><li>Many wineries over leveraged and cost of capital is rising</li><li>Consumer demand is softening, margins getting compressed</li><li>Inflation and tariffs increasing cost of production</li><li>Excess inventory leads to no pricing power and often financed with lines of credit where rates are increasing</li></ul><p>There are more sellers than buyers of wineries, Metis has to be selective with clients due to high opportunity cost and desire for a high success rate</p><ul><li>Many wineries are not sellable (e.g. - too personalized, not differentiated, weak financial strength)</li><li>If wine M&amp;A firms don’t take clients, they often end up with real estate brokers or non-wine experienced brokers</li><li>Characteristics of sellability: portability of the business, desirable assets, and profitable business</li></ul><p>Gundlach Bundschu CH11 bankruptcy: buyers’ offers didn’t’ clear their debt, banks rejected them; in the past banks would just give businesses more rope</p><p>May be able to get assets cheaper in bankruptcy, but in worse condition</p><p>Large disconnect between buyers (40-60% discount) and sellers (10-20% discount) expectations, leading to a lot of inaction on M&amp;A</p><p>3 types of transactable deals</p><ul><li>Puzzle pieces - a unique match that create value and is not substitutable, still has strong valuations</li><li>Price - price gets too good</li><li>People - people already know each other and often do business together</li></ul><p>Valuations</p><ul><li>Sold a couple vineyards for record setting prices (only for the right assets)</li><li>Distressed situations getting very low pricing</li></ul><p>Main buyers today</p><ul><li>Historically were the large wine companies; but either not acquiring or very cautious, many are now sellers</li><li>High net worth / family offices - more challenged now as wineries less fashionable, most want a real business</li><li>Financial buyers (both institutional and opportunistic investors) - a lot of new buyers hovering, but not a lot transacting; like bigger transactions to make the deal worth it (often looking at ~$10-50M)</li></ul><p>Metis expanded into CA and Europe ahead of plan, partially due to a competitor selling to a bigger bank</p><ul><li>CA more pessimistic on wine market and more proactive in making changes</li><li>CA and WA more aggressive in removing vines</li><li>OR last to remove, has not had severe weather conditions since 2020 (used to be every 3-4 years), building oversupply</li><li>Europe totally focused on export</li></ul><p>Metis pricing model - get a % of transaction value + retainer which is credited against transaction fee</p><ul><li>Takes engagement fee up front and retainer when once an offer is accepted</li><li>Engagement fee important to have sellers have skin in the game</li><li>Competitors often take fixed monthly retainer</li></ul><p>What a client gets from Metis - a confidential marketing process to qualified buyers</p><ul><li>Has &gt;1,000 prospective buyer list, narrows down to 30-60 for each deal</li><li>Private, direct outreach to each prospective buyer</li><li>Business modeling and proforma financials w/ recommended business changes</li><li>Confidential Information Memorandums (“CIMs”), a full marketing package</li><li>Tax and legal work to optimize transaction</li><li>A friend and “therapist” through the sale process which can be lonely</li></ul><p>Wine industry pathway needs consumption stabilization, then work down excess inventory to re-balance wine industry, then a lot of M&amp;A will happen</p>","author_name":"Robert Vernick, Peter Yeung"}