Case Studies - Lion Brewery
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Food/Beverage Industry www.lionbrewery.com |
Blackmore Partners, with Ron Hammond and Cliff Risell, facilitated the acquisition of Lion Brewery with equity backing from Blue Point Capital Partners. Blackmore enabled the executive team to achieve their goal of "restoring the roar," as characterized by Cliff Risell, in the Pennsylvania-based Lion Brewery. Ron Hammond adds, "They constructed a compelling package that was attractive to private equity firms. Combined with their expert coaching, I was ready to answer any and all questions that private equity firms raised."
The key to reaching Lion Brewery's full optimization was the experienced executive team of Ron Hammond and Cliff Risell. The executive team has a combined 100 years of experience in the beverage production and bottling industry. As former senior level executives of Coke Consolidated, these men realized the potential for a higher-level of efficiency and profitability through contact beverage manufacturing.
Mr. Hammond and Mr. Risell came to Blackmore with one goal in mind, to become the first national specialty contract beverage manufacturer, addressing the complex requirements of the rapidly growing new age beverage segment. In addition, they aimed to provide increased sophistication of the outsourced manufacturing to major brand owners. Blackmore advised the executive team in the development of an extensive business strategy aimed at consolidate the industries Tier 1 manufacturing and supply chain services. By partnering with a single national supplier, the model reduced oversight risk and ensured a higher, more consistent level of quality.
Having facilitated a number of platform acquisitions, Blackmore understands the process of identifying potential acquisition targets, the complex relationship between the buyer and the seller, and how to cope with problems that may arise. Ron Hammond explained the persistence of Blackmore as, "At one point, the private equity firm that we were dealing with backed out; Blackmore Partners picked up right where we left off and continued the process. Their unparalleled dedication and persistence got the deal moving forward, and the difference is: unlike typical consultants that would just walk away at this point, they stuck with me to the end, and I truly appreciate that."
Blackmore also coached the executives through the process of identifying potential target companies, assisting with the contact and evaluation of over 50 target companies. The ideal strategic seller was identified as Lion Brewery, a leading Pennsylvania brewery and contract beverage manufacturer with $54 million of annual revenue. Blackmore worked closely with the executives to vet the brewery as a ready and willing seller before negotiating a letter of intent with the owners.
Founded in 1905, Lion Brewery is located in the northeast region of Pennsylvania, United States. The company is known for its brewing reputation and expertise in making high-quality beverages. Since its inception, the brewery had operated as a contract beverage manufacturer. The company has acquired various brands over the 105 years of its operation, including Olde Philadelphia soda, Lion Brewery root beer, Lionshead beer, and Stegmaier beer. The platform served as a catalyst to establish a Tier 1 manufacturer and profitable returns.
After writing a confidential offering memorandum, Blackmore Partners introduced the deal to over 35 private equity firms. In order to secure confidentiality, firms were provided confidential information only upon execution of a nondisclosure agreement. Blackmore facilitated the acquisition process by conducting management meetings with prospective firms, coordinating due diligence, reviewing the contracts and assisting in the closing. A number of firms expressed interest in the deal, creating to a beneficial bidding war. By working alongside the executives, Blackmore was able to select the ideal investor as Blue Point Capital Partners.
Blue Point Capital is a national private equity firm located in three regions across the U.S.; the Midwest, Pacific Coast, Southeast, as well as an additional firm in China. The firm typically invests $10 to $50 million in middle-market transactions. Blue Point seeks companies generating $25 to $250 million in revenue. One of Blue Point's primary investments is distressed companies, by allowing them to offer exit opportunities to the seller while maintaining current ownership. One the firm's targeted industries is value-added distribution. Blue Point only invests in companies which meet their principles: growth opportunities, experienced management, leading companies, and liquidity options. This made Lion Brewery an ideal target for Blue Point Capital since an exceptional management team was looking to acquire the leading company in the beverage production and contract packaging industry.
Through negotiations, Blackmore structured the best possible deal for all involved parties: the executive team, Blue Point Partners, and Lion Brewery. This deal structure represented a combination of an industry roll-up, a management buy-in, and a strategic product/service expansion. Blue Point Capital invested $28 million in equity to acquire the platform brewery. Revenues and profitability rose dramatically during the 2 years following the closing. The transaction equated to a 21% IRR for both the executives and Blue Point Capital, as well as positioned Lion Brewery to further expand in lucrative new markets.
The funding provided by Blue Point Capital enabled Ragen to grow Lion Brewery to its fullest potential. Selling over 750,000 cases a year, Lion Brewery is the 15th largest American-owned brewery. The brewery was awarded for its high quality products in the 2009 and 2010 World Brewery Championships. Lion Brewery has acquired a facility capable of tunnel and flash pasteurization. These processes allow the brewery to provide various services to customers. The brewery specializes in bottling, canning, and racking quality products. Being a QUA Certified Organic and OU Kosher Certified, sets the brewery apart from competitors. Together Blue Point Capital, Cliff Risell and Ron Hammond have successfully grown the company to over double its prior EBITDA.
Ron Hammond explains, "Blackmore Partners offered me an opportunity that would have been impossible to achieve alone. Their superior knowledge of the private equity industry really allowed my efforts to pay off."