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Read MoreThe craft brewery industry experienced a surge after Constellation Brands acquired Ballast Point for $1 billion in 2015. Microbreweries, such as Modern Times Beer, have popped up across the nation, with inexperienced management teams pursuing rapid growth without sufficient operating systems and controls, heavy debt loads, and poor financial acumen. A viral #MeToo campaign highlighting a hostile work environment in the microbrewery industry further compromised the efficacy of Modern Times’ management team, leading to its CEO/Founder's resignation in May 2021.
A seasoned industry expert, the CEO was recruited to join Modern Times’ board of directors in late 2021 to deal with the company’s toxic cultural issues. The CEO was appointed in December 2021. The CEO uncovered the depth of the company’s financial problems, revealing that its employees, creditors, and other stakeholders were unaware of the situation.
As the CRO of craft brewery Modern Times Beer, our experts achieved a recovery exceeding five times the estimated liquidation value for the company’s secured lenders and helped save more than 160 jobs by auctioning the business as a going concern. The successful sale closed just one week before the lenders were expecting to liquidate the company for $1.5 to $2.0 million, which would have resulted in a write-down of over 90% for the secured lenders and total losses for downstream lenders.
“We are very pleased with the outcome given the dire situation we walked into – a company unable to fulfill customer demand, lenders threatening liquidation, and a C-suite of just one, newly-hired executive after management walked out the door.”
Mike Bergthold
When facing an illiquid and culturally troubled company, the CEO pursued a discovery process that resulted in the abrupt resignation of the entire C-suite, leaving the company without financial or senior executive support. The CEO took quick action to remedy the situation:
Keys to the tremendous outcome were:
During the discovery process, our experts and the CEO identified that:
Our experts expanded their scope of work to serve as a fractional CFO, add an interim controller, and hire a senior financial analyst to bring the financial accounting up to date and create an accurate multi-year projection model – essential for determining restructuring options and marketing the company for sale.
By presenting practical restructuring options projected to yield substantially more than the company’s liquidation value, the restructuring team successfully convinced the senior secured lender to increase its exposure to the illiquid company by about 15% to stabilize operations through a going-concern sale in exchange for a voluntary “receivership lite.” This strategy proved extremely effective for all parties involved.
Mike Bergthold, CTP
Senior Managing Director
Strategic Advisory Practice
+1 213 404 0113
[email protected]
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