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Recapitalizing for Growth in the Pandemic Economy

Recapitalizations may sweep through the craft-beverage world, according to Martin W. Saylor and John D. Wagner of 1st West Mergers & Acquisitions. But what is a recap? And how does it differ from an acquisition?

Martin W. Saylor , John D. Wagner Oct 27, 2020 - 8 min read

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In the past few months, as part of our consulting work, we’ve been speaking with a good number of breweries of various sizes from all over the country, ranging from annual production of 2,500 to 50,000 barrels. What are we hearing?

Smaller companies, stressed by the pandemic, are open to selling a portion (even a majority) of their firms and taking on partnerships that can help ensure stability and growth, ideally fueled by new investment from a new partner/owner.

Larger-brewery owners—specifically, strategic partners, private equity, or family-owned enterprises—are bargain hunting in the “virus era” and willing to pay a fair acquisition price. These buyers want to roll up smaller operations into their efforts. They are often eager to keep the previous owners’ talent in place, although maybe not in full control. I’ve also been speaking with numerous investors who suggest there’s an abundance of “dry powder” (liquid cash) out there, ready to rush in for the right opportunity.

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