Carol Collison for eight years has been a partner of St. Helena-based Global Wine Partners LLC, a sell-side mergers-and-acquisition adviser and valuator.
She is set to be on the mergers-and-acquisitions panel at the Business Journal’s Wine Industry Conference on April 28.
Collison talked with the Journal about the significance of big wine M&A players moving back into buy mode after seven years and how they’re scrutinizing deal prospects.
What do recent acquisitions tell us about wine M&A?
CAROL COLLISON: I would characterize it as, the “animal spirits” have returned. I don’t know who coined the expression, but it describes a marketplace where people are feeling very positive, aggressive, willing to take risks. It hasn’t been there since the last major wine downturn in the wine market in 2009–2010.
The evidence for that is that in 2015 there were three buyers of brands — E&J Gallo, Jackson Family Wines and The Wine Group — that have not bought a brand of significance in over seven years. They have done a lot of real estate transactions, but that’s very different from an M&A transaction.
When those deals broke last year, it was, “OK, the big boys are back.” That’s created an environment in which everyone feels like the water is fine and come on in.
What types of buyers are looking for deals?
COLLISON: There are three types of buyers in the wine M&A market. The lifestyle buyer: They’re really not an M&A player. They just want a house with a vineyard.
The strategic guys are always in the market, but it just depends on type of buyer it is. The big guys are in high-quality, high-profile deals. The difference in 2009–2010 was it was guys in doing deals at discounts over asset value. The buyers are always strategic buyers, which is fine because they are already in the wine business.
We’re in a good space, because almost everybody is out there right now. Those looking for a discount over asset value are buying, and those looking for a good growth are also out there.
The third tranche of buyers are private equity. There are some rumblings that there are some financial buyers trying to get some things done. Those tend to be marquee deals as well.
What types of deals are in demand?
COLLISON: [Wineries, vineyards, brand-only, minority share, majority ownership and founder remains involved.] It is still a buyer’s market, notwithstanding all the activity. If you are a seller and what you have is not exactly what the buyer wants, you are not going to get a deal done.
There are so many transactions trying to happen, buyers know that if this deal doesn’t work there is another one coming along tomorrow. They are not being very creative in saying, “It’s not quite what we want but I’ll buy it and tweak it to make it what we need.” It has got to be plug and play.
Is this a part of the succession wave we’ve been hearing about?
COLLISON: Yes and no. The decision to sell is so idiosyncratic — wine is such a personal business — the willingness to face your own mortality is not always there.
Generally, when people see a lot of big transactions happening, they tend to think now is the time.