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Beer Business Finance

Podcast: A Practical Guide to Beer Wholesaler Mergers and Acquisitions

October 05, 2024 • Beer Business Finance

Today on the podcast I'm joined by Orman Anderson, CFO from Glazer’s Beer and Beverage, and RJ Martucci, a partner with PKF O’Connor Davies.

You'll hear the audio version of our NBWA presentation on A Practical Guide to Beer Wholesaler Mergers and Acquisitions.

Our presentation covers four key issues -

Target identification: Selling or buying, who are you valuable to, and who is valuable to you
Due diligence: Research, homework, what you need to do
Valuations and models: Current market, quantitative and qualitative measurements
Post acquisition: What happens after the deal is done, and how to combine the right way

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Learn more about the Beer Business Finance Association, we are a network of beer industry professionals who come together to network, share ideas and best practices to build a stronger beer business

Speaker 1: 0:00

Today on the podcast, you're gonna get a practical guide to beer wholesaler, mergers and acquisitions. I'm joined by RJ Marucci from PKF O'Connor Davies, and Orman Anderson, the CFO from Glaser's Beer and Beverage. We talk all about target identification, whether you're selling or buying, who are you valuable to and who is valuable to you. We talk due diligence, the homework, what you need to do when considering selling or buying a business. We cover valuations and models. What does the current market look like? What are the quantitative and qualitative measurements you need to be aware of? And then we talk post acquisition. What happens after? How do we combine these entities the right way to create a successful outcome? So for now, please enjoy this podcast on a practical guide to beer wholesaler, mergers and acquisitions. Just a quick note, and we'll be right back to the podcast. I wanna let you know about the Beer Business Finance Association. This is a network of financial pros, just like you looking to improve financial results, increase profitability, connect with your peers, and share best practices. Our mission is to help your beer business improve financial results through transformational financial training, support, and networking with your peers. If you'd like to learn more, please go to bbb f association.org or simply email me at ka@beerbusinessfinance.com . That's KAR y@beerbusinessfinance.com. Hello and welcome to the Beer Business Finance Podcast, where we combine beer with finance to help you create delicious profits in your beer business. I'm your host, Kerry Shumway . I'm a certified public accountant, a former CFO for a beer distributor, and I love numbers. This podcast will provide you with useful financial guidance that you can implement right away in your beer business. To make more money in addition to this podcast, please visit beer business finance.com. Here you'll find free tools and resources information on upcoming courses, and you can sign up to receive the weekly beer Business finance newsletter for free. Each week, we cover a specific financial topic to help you improve the financial results in your beer business. Let's get started.

Speaker 2: 2:18

Hello everybody. Welcome and thank you for joining us here on this beautiful Monday morning in San Diego. We're gonna talk about beer wholesaler, mergers and acquisitions. We're gonna dig into business valuation methods, financing options, keys to successful due diligence, and the things you're gonna wanna generally look out for, you know, when you're entering a transaction. So, we're gonna cover a lot of ground today, and it's impossible to really hit on all of the points that are important. So we put together some resources for you. So I'd encourage you to take out your phones , scan this QR code. Uh , we're gonna have some white papers for you that you can use , um, for reference , you can go ahead and download . So , I'm fortunate to be joined today by Orman Anderson from Glazer's Beer and Beverage, and RJ Marucci from PKF O'Connor Davies. Uh , my name is Carrie Shumway , um, from Beer Business Finance. And between the three of us, we've been involved in over 30 transactions, you know, buying, selling beer businesses. So hopefully we can share some tips and strategies that , uh, can help you understand the basic components of wholesaler mergers and acquisitions. So, with that, I'd like to turn it over to Orman and then to RJ to introduce yourselves.

Speaker 3: 3:31

Excellent. Thanks, Carrie . Uh, yeah, so I , uh, my background is , uh, in actually banking and in accounting. I, I , uh, got an undergraduate degree in accounting, worked as a CPA for , uh, three or four years, went to business school, got an MBA, focused on finance, and then worked as an investment banker for about 15 years. And then the last , uh, 10 or so years I've been with Glazer's, I started with them doing mergers and acquisitions for the combined Legacy wine, spirits, and beer business. And then about eight years ago, we carved out the , uh, beer business and contributed our wine and spirits to a joint venture with Southern Wine and Spirits, which is now Southern Glazer. And so, the family that I work for owns a minority interest in the Southern Glazer's wine and spirits business, and then also owns the Glazer Beer and Beverage, which operates , uh, Miller Cores and Constellation focused distribution businesses in five states, but most of that in Texas.

Speaker 4: 4:35

Alright , good morning everyone. Uh, my name's RJ Marucci . I , as Kerry noted, I'm a partner with PKF O'Connor Davies. We're a full service accounting advisory , uh, practice based outta New York, but we have offices in seven states. Um, we have a , a large international network as well. I have 20 years of experience , uh, in public accounting , um, like Orman. I, I am a CPA. And , uh, I spent , uh, about 10 of my 20 years in public practice with an emphasis on , uh, the beer and beverage industry, both distribution and manufacturing. So we've worked , um, with clients , uh, just like yourself as well as , uh, various , uh, craft breweries and distilleries and wineries along the way. Um, I'm, I'm glad to be here. I've spoken , uh, many times to various MBWA , uh, audiences, and I'm , I'm looking forward to a great conversation today, Carrie .

Speaker 2: 5:30

Awesome. Thanks guys. So, some housekeeping before we get into the meat of this , uh, the presentation deck will be made available for you, and obviously we're, we'll be around after the presentation. If you wanna just come up, say hi, introduce yourselves, or you can hit us up , uh, via the emails that we have there , uh, from the previous screen. Uh, this is, we'd like this to be an interactive session. You know , this is your time, your time is valuable, we're here for you . Uh, so if you do have questions, you know, raise up , just ask that que don't wait till the end, you know, if something's, you know, front of mind. Um, we wanna make sure that we're answering , uh, the questions that are important to you. So, on that note, we do have a question that we'd like to kind of pose to the audience. So, by a show of hands, how many folks here have been involved in a transaction of some kind? Either you acquired a beer business or you were acquired yourself . So how many, just raise it up. Like how many hands? Okay, so I see we have, we have quite a few hands raised up, so that's, that's great. So this'll be , uh, hopefully more relevant for folks that have been through it. You know, you have your own perspective on it. Um, so thank you guys for that. So here's the outline. Here are the topics that we're gonna cover today. We're gonna start with target identification. So whether you're selling or buying, you know, who are you valuable to and who is valuable to you? Uh , because you know, that's something to be thinking. And we may be of a seller mindset, but you know, there may not be opportunities to buy as well. So we'll go through those due diligence. This is the homework that you need to do the research. Uh, so we'll dig into the important aspects of that, and then we'll cover some valuation models, what the current market looks like, the quantitative and qualitative measurements to consider. And we'll wrap it up with post acquisition, what comes next, what happens after the deal closes, and how can you combine the right way. So with that, I wanna turn it over to you Orman and , uh, take us through target identification.

Speaker 3: 7:31

Perfect. Alright , so , um, we have done , uh, at Glazer's probably , uh, eight or 10 acquisitions over the last six or eight years. Uh, and we've actually done a few divestitures as well. And I'd like to categorize our strategy in m and a in sort of three buckets. Uh, and the first bucket is, is the most valuable bucket, and that is a j or overlapping markets. And so if you have a target that overlaps your footprint, that sells to the same customers that you sell, that has a warehouse in the same general vicinity as your warehouse , um, that delivers to the same customers, that is a highly valuable, highly strategic target for you. Uh , we , so we had this, and these situations don't , uh, don't come up a lot , um, because typically most markets you only have a ab , uh, or a Miller, Coors , or Constellation focused wholesaler. And you, you've only got two of them . Um, we had a market, and it happened to be our largest market in San Antonio, Texas, where we had three distributors. We were the Molson Coors distributor, there's an AB distributor there. And then there was a third distributor that had , uh, a lot of brands that overlap with us in other markets, but we just didn't have 'em in San Antonio. Brands like Dos Equis , the, the Heineken Mexican portfolio , uh, some of the Paps portfolio, some of the Diageo portfolio. So , um, and it was sort of like the , the , the market share was the AB guy had probably 50% market share. We had about 30% market share. And this , uh, this third player had about 20% market share. And so that was an incredibly valuable acquisition for us. Uh, think about being able to deliver to the same customers and sell to the same customers , um, but not, and , and just have a bigger portfolio of products to sell. Um, so a lot of that gross profit that we acquired fell to our bottom line, meaning that was , we, we were able to pay a very high price for that and still have it be profitable for us. So that is sort of the most strategic and the highest value target is someone that overlaps your footprint. Um, and, and , and the opportunities there now seem to be , um, you know, even if you, you're only down to two beer wholesalers, the opportunity is, is in those ancillary products. So the and beverage products. So those are things like beatbox . There are things like , uh, non out products, energy drinks, high, high value waters , uh, and even some of the spirits portfolio, you've seen RAC go to the beer distribution network , uh, with, with their spirits portfolio now. So those are the opportunities, the higher value opportunities , uh, in your existing footprint that are, I think, the most strategic. The second most strategic would be adjacent markets. And so those are markets adjacent to where you operate , uh, where there might be opportunities to still get synergies. Maybe you can't overlap and you can't service it from one warehouse, but you can divide up your volume between the two warehouses and optimize a little bit , uh, and , uh, and have influence over , uh, a greater territory. One of the advantages we find there, for example, in Texas, HEB is the largest , uh, grocery chain in Texas. And if we can cover more HEB stores, we have some efficiencies for calling on that chain. And we become a more important partner to HEB , the more HEB stores that we're able to service. So adjacent territory is, is highly valuable. And those, those opportunities, I'm sure you're, is , you're well aware of this applies both on the buy side , on the sell side. If you're that guy in the market that has 20% market share, your profitability is not what you're gonna be bought on. It is the profitability of your sales to somebody else. You're actually worth more to someone else than you are to yourself. Uh, and similarly, an adjacent market as you're looking for who would be my buyers, the first place you're gonna look after you look at your own market is the adjacent markets. That's where your next most valuable. And then the third , uh, category would be just other markets, new markets that are not adjacent to you. Uh, and we see opportunities like those , uh, pop up from time to time. And what is really critical for us as we look at getting into a market that isn't adjacent is one is critical mass. Does that market have critical mass in order for us to be able to be profitable in, in that location? And then the second thing is, what is adjacent to that that we could consolidate in the future? And so we might stretch a little bit on valuation to get into a new market that isn't adjacent to , that's where we really don't have very many , uh, at least local operating synergies . We may have a few back office synergies, but we'll pay a a little bit higher valuation for that if there is an opportunity to consolidate around it. And , uh, and so those to me are the three layers of target identification and sort of strategic value when we look at where do we wanna spend our time and, and, and what's most valuable for us from an m and a perspective.

Speaker 2: 13:04

I love that Orman , you know, I , you know, I hadn't thought about that third piece that you just mentioned, which is 'cause because the two, the two, the first two, like overlapping and adjacent, that , that's what readily comes to mind, right? But then you're like, wow, I , there isn't, you know, I've already done. Now what do I do? I'm , I'm , I , I , there's no more opportunities. But I like how you said, if I'm gonna go to a new market, I also wanna look at that step one and step two is, what else could we, what's adjacent to that? Mm-Hmm. <affirmative> . So you sort of replant the flag. I think that's very cool.

Speaker 3: 13:31

Yeah. I'll give you an example. One in one state, we, we used to be in a, in , in a small corner of Kansas. Well, it , it was actually a big , geographically, it was a big corner of Kansas. I think we had more geography than any other beer wholesaler in Kansas. The only problem was it was a geography where no one in Kansas lived. Uh, and so it was in, in, in , uh, southwestern Kansas. And , uh, we had such a small operation there, but we had to comply. There were so many different things we had to do as an organization that were different to comply with Kansas law. Um, and so what we found is that for all of the employment law, for all of the beverage law, for all of those things that we had to keep abreast of, it was just really not worth it for such a small operation. And so that's what I mean by having critical mass. You wanna have enough volume that one, that's a platform you can consolidate on. But two, that the back office investments that you need to make to be compliant and, and to , you know, things like health plan benefits, all those things just add layers of complexity. And you need to have enough critical mass there to make, to amortize that cost over,

Speaker 4: 14:45

I I gotta say Orman, you , you make a great point with the, you know, strategic approach of looking at things from what's the additional administrative cost to doing business in a new market. Um, you know, we look at things , um, like franchise protections and, and things of that sort. But you delve into kind of the employee side of things. Um, in New York, you know, there are establishing kind of various baseline levels for which an organization has to have , uh, a retirement plan in place. So, you know, if you move into a new market and you're not familiar with certain, you know, requirements of that nature, the administrative cost of getting in is now probably twice the cost of, of doing business in this new location. Right. And I , I think being , um, being aware of those , uh, requirements is, is crucial getting into kind of the due diligence process. Mm-Hmm. <affirmative> ,

Speaker 2: 15:41

Absolutely. You know, I would throw one, I guess cautionary tale out . One of the acquisitions that we had was in an overlapping territory, but the company that we acquired was predominantly, the portfolio was different, it was wine. Um, and there were a lot of complexities with that portfolio. And I know Orman, you've expressed some hesitation relative to sort of a non-alcohol side and sort of, sort of un understanding the nuances of different, it can be great for that incremental margin in filling up the truck and so forth. Um, but also it comes with some watch outs. And, you know , when we acquired the wine company , uh, it was a very different culture. You know, it was very different mindset in terms of the sale , the sale process. Uh , it was very, you know, white tablecloth and a bottle at a time . You know, we're used to moving, you know, cases, pallets of 30 packs, and now we're selling a bottle at a time. We're like, whoa, whoa, this is, this is a lot different. So we need to look at the, those potential , uh, complexities of the portfolio culture, et cetera . Yeah .

Speaker 4: 16:44

Yeah . And Carrie , just adding to that, when, when you think about, you know, selling by the bottle of wine, it's not just the sale process, it becomes the inventory process too. Because doing things of that nature, you tend to expose yourself to a lot of product loss , um, you know, just within the warehouse or even out in the trade.

Speaker 2: 17:04

Great point. Mm-Hmm. <affirmative> , that's great. So let's shift now. Let's talk about , um, the due diligence process. And RJ I want you to kick us off here. Kind of tell us, tell us about this. What, what's involved and what is this? How does it work,

Speaker 4: 17:19

<laugh> ? So, so the diligence process kind of is like buying a car, right? So the initial phase is really kicking the tires. Um, a lot of the times we get involved in a , in a project is when our clients come to us because they've been approached by a broker. Um, here's a , here's a pro forma package of an opportunity for you guys to buy. Um , we get it sent to us. And, and we spend, you know, a couple days really just kind of kicking, kicking the numbers around, looking at , uh, geographic location, looking at the operations, whatever we can find online. Um, and , and really getting a sense of like, okay, is this something we even wanna start into? Um, you know, diving into , um, further steps in the, in the due diligence process. Because a lot of times that we've been involved, it's, here's the initial phase. You have two weeks to turn around a , a , a multimillion dollar offer before you can even really see what's under the hood, right? So , uh, we, we try to do our baseline work layered into what our client's already doing, see if we can kind of identify , um, what the value is to them and, and, you know, what capital we need, what sort of financing we would need before we even we'll further entertain stuff. Um, and then, and then from there, if, if , um, an initial offer is accepted into the conversation of, all right , we , we now have three people , um, here's the open book. We, we will send a laundry list of things to our clients to get tax returns, financial statements from previous years , um, access to general ledger detail , uh, things of that sort so that we can start doing an apples to apples comparison, look at case volume, what the brands are doing , um, in this potential opportunity , um, as, as well as what sort of , uh, efficiencies , uh, can we employ. Um, Orman talked about kind of that premium factor of , uh, the overlapping and the adjacent. We look at things from a synergistic perspective, right? What are the economies of scale by layering in this new operation? Um, and, and we'll get more into the pitfalls later, but these are things that you really heavily wanna dive into , um, before you start laying money on the table.

Speaker 3: 19:44

Mm-Hmm . Yeah. Hey, I, I would add to that, rj, what , what I think about just the big picture due diligence, it is understanding what it is you're gonna get. And when you're buying something, you're , you're buying it one for the income stream, right? You wanna make sure that what you're buying is gonna be there. And in my background in banking, it , we are so lucky in the beer industry to have franchise protection. It is such a driver of value, and it makes the diligence so much easier when, you know, with some high level of certainty that year in and year in , year out, you're gonna have the brands that you have to sell. And so that really gives you some stability. And that's the reason why relative to other business models, beer companies, beer wholesalers sell for such , uh, high multiples on a relative basis to other similar size businesses. And it is that stability of the franchise, right? And then you also need to know what, what assets am I getting? Uh , you know , warehouse , uh, vehicles , uh, equipment, those sorts of things. Is it functional? Uh, and then may , maybe the third part is the liabilities. What am I gonna inherit in this? Uh, and this is where structure really comes in. And I think one of the key questions in diligence, and this will drive how much diligence you have to do, is, am I gonna structure this deal as an asset purchase where I'm just gonna go buy somebody's assets or am I gonna buy their stock? And most of you probably already understand that, that that difference in , in , in the differentiation between those two. But the level of diligence you have to do for an asset deal is much lower than for a stock deal, because an asset deal, you're just buying assets and anything that happened in the past with those assets is somebody else's problem. Whereas if you're buying stock, you're stepping into the shoes of the seller and you're inheriting whether you want to or not, all of their past potential litigation, all the past employer liability , uh, benefit plans, everything else that goes with that. And so you can just sort of picture there the difference in the level of scrutiny you need to have for a target, depending on how you structure that transaction.

Speaker 4: 22:01

And , or I mean , your spot, spot on with that third category of liabilities, the unknown risk factor is, is where we spend a lot of our time in , in the case of a stock deal, right? It's, it's not only what do we get value out of, right? You said the, the income stream, the assets, but it's also what complicates those two items. And it's the unforeseen liabilities. Um, what we see kind of in, in union based , uh, shops is always that unfunded pension liability. And a lot of the times that that gets carved out as kind of a , uh, with the proceeds, you will ensure that this liability is, is exhausted and removed and and fulfilled. Um, but a lot of times that then goes back to the conversation of, what's the top line you're gonna pay me? Because everyone kind of has their bottom line cash out , uh, number that they're willing to accept. So that, that always becomes the , uh, the, the fun conversation , uh, exchange between the buyer and the seller.

Speaker 2: 23:08

Mm-Hmm. <affirmative> curious . I'm curious to hear from you guys on the timing aspect. 'cause we don't have li we , we have limited time, right? RJ , to your point, it's like you get the deck , you've got two to three weeks, you , you've gotta come back with an offer and , and it's probably gonna be sizable. How do you prioritize the due diligence lists? And , and maybe I'll kind of frame it up like this because I , I think there's probably at least two buckets of due diligence. It's coming up with that initial offer, which is usually incorporated into a letter of intent , a non-binding letter of intent, right? Right . Um, so that's bucket one is what do I need to get my hands around a number? Um, and then bucket two, what do I need to get my hands around the rest of the diligence that needs to be done in order to satisfy all of those other concerns? So maybe rj , you like, how do you , uh, how do you prioritize that initial due diligence?

Speaker 4: 24:01

Right? So our, our number one thing, right? It, it drives the entire business is , is case volume, right? So we wanna get our hands around what the case volume is now and , um, what the potential future case volume is. And, and as we've seen just within beer recently, there is kind of a slight consistent attrition in the volume of beer being sold. Um, it can be made up in other products, wine and spirits nonna and things of that sort. But primarily we deal with beer as, as our main product, right? So what is, what is the potential volume attrition, right? Because we can make up dollars with, with steady price increases. But the problem is, is that by removing the volume, eventually you'll be kind of in the dec in a decline from a revenue perspective. And so it's looking at the market that the potential , um, you know, distributor that you're acquiring is located, what's, what's the demographics look like? Um, you know, in the northeast, we had a lot of people in the last few years wise up and move South <laugh> . Um, you have a lot of aging population as well. So it's what, what does the consumer look like, right? Because you always had that, I guess, standard view of , um, as you progress in age, you also increase in value, therefore you change the products you tend to consume , um, you know, more of a premium nature or shift into wine and spirits. So what is that average consumer look like? And, and then from there, we drive our projections off of that. So, you know, we'll, we'll get a sense of what the next five years would look like based on, you know, sales, staying flat sales, you know, reducing at say 2%, things of that sort. And we get a sense of what the value looks like with, with those changes , um, to kind of start really trying to hone in on what a realistic price would be.

Speaker 2: 26:09

Got it. Now , but you orman , how do you prioritize that ?

Speaker 3: 26:12

Yeah , so, so well said rj. I, I think , uh, in a nutshell, it is just like RJ said, sales and where are sales going , uh, driven by demographics, it is gross profit. Uh, that is one of our key valuation metrics is gross profit. And so , uh, one of the things we see is everybody has, well, not everyone, but there are lots of different variations of the definition on gross profit. And so digging into the components of gross profit, what's included there? How do you , uh, one of the biggest thing is are depletion allowances. And so you've got discounts and depletion allowances. How do you account for those? Um, uh, because when you compare a gross profit margin one to another, how you account for that will differ, will , will make that number different. So you have to line those numbers up. So it's really validating revenue and gross profit. And then we also wanna see operating profit. And if it's a new market that we're going into, we really kind of key off of what's the operating profit the operator there is getting today, because that's a pretty good proxy of what it's gonna cost us to operate in that same market. If we're able to fold operations into our own, we look more at, okay, what does this look like on an incremental basis? We're gonna take this gross profit, and then what incremental expenses do we need to incur in order to service this additional volume? So we're gonna have to add, you know, three more routes, four more routes, whatever it is. And , uh, we've got some economy scales in the back office, so maybe we don't need to add any more payroll accounts payable , um, general ledger accountants, so that sort of thing.

Speaker 4: 27:45

Yeah . And , and Orman, I think you're, you're spot on with gross profit being kind of the next, you know, number to, to look at, right? So, you know , looking at brands, what the volume of those brands are, what the gross profit is from those brands. And, and we, we ourselves, when we do our, our financial work for our clients, we've established a , uh, uniform format that we put all our distributor clients on. That is more or less , um, you know, our, our main gross profit is derived off of just the product, less our , you know, backed out of our sales Mm-Hmm , <affirmative> , so that we can get a sense of what is the true dollars we have to run the business from there. And , and certainly then looking at gross profit versus bottom line , uh, or ebitda, that's gonna sway kind of what sort of multiples we're gonna be looking at, right? Mm-Hmm, <affirmative> ,

Speaker 2: 28:39

Yeah, it's a lot, it's a lot to do in a short amount of time. And I think it, it really just underscores the need to have a team ready to accept this information, to digest it, to do the analysis. Uh, 'cause there's a lot of, a lot of moving parts. You know what , Gary ,

Speaker 3: 28:54

Gary , let me , let me add one thing to that. Uh, because I would tell , I would say time is the enemy of a deal, and you really need to act quickly and get things done. You, the longer a deal draws out, the more likely it is that someone's gonna find out that there's something going on. You're gonna get employees that are suspicious and, and rumors are gonna start. And as a seller, especially, it , that could be very detrimental to your business. So before you even engage in that process, you wanna make sure that you are prepared to respond with the information that the, the buyer's gonna need, your bidders are gonna need, so that you can compress that timetable as much as possible. Because the longer it draws out, the more , uh, you're at risk of rumors getting out and , uh, you know, you all of a sudden you start losing employees and , uh, the wheels can come off pretty quickly. And so you want to be able to act, really be able to respond quickly and, and , and just compress that process as much as possible.

Speaker 4: 30:00

And, and kind of piggybacking on that, Orman, right? We go back to, you know, when we, when we discuss kind of what a target looks like, right? We, we didn't really dive into what do we look like as a target? And I think it goes into that timing of conversations of saying like, are we prepared to go to market if the opportunity presents itself for us, you know, to be in a, a selling position. And it , it is having, you know , uh, run through your accounting to see what sort of things you would remove if you, you know , if it didn't directly benefit you , um, as an owner, right? So a lot of times you have health insurance for , um, retired owners or, you know, some small payroll for family members that really aren't engaged in the business. Um, you know, certain promotional and trade spending that may be directly benefit to an owner versus actually, you know, the direct carrying on of the business. So, you know, really looking at yourself and saying, if I were impartial and this wasn't my business and I was running it for someone else, where could I cut back on things to make it better? Mm-hmm , <affirmative> and , and doing all that , um, ahead of time is, is key to kind of speeding the process along from a sell side.

Speaker 3: 31:21

Yeah.

Speaker 2: 31:21

Let's shift now and talk about, you know, what's usually the very first question that , uh, an owner might ask va , what's it worth? You know, what's the value of this thing? How much am I looking at? Uh, 'cause very often people would say, well, I don't know if I wanna sell. It really depends on the number . So this, this thing called valuations is a , is kind of important, or why don't you take us through how you approach , uh, the valuations and the models and, and all that good stuff.

Speaker 3: 31:50

Yeah, so we , and we've talked about a lot of this , uh, a again, if I go back to the three different types of, of deals strategically, you've got overlapping transactions where you're really just buying brand rights and folding them into your existing operation. Those are the highest value. Uh, and, and , and , we'll, we'll go through a few details here in just a minute, but those are the, that's where you're gonna get the most value. And those are typically measured as a multiple of gross profit. And , and part of that is that it's, it's sort of unknown how much incremental operating expense it's gonna be to get those delivered, because it depends on who the buyer is. And so, gross profit is a typical metric. Um, as RJ mentioned before, the outlook for those brands is very important. There's a reason why Constellation sells at a higher gross profit multiple than , uh, a lot of other brands. And it really has to do with what you're buying today. If it's growing at , you know, in the 10 to 20% a year, that allows you to buy that multiple down over time. And , and , and if you look out five years from now, that seven or eight times you may pay for Constellation today , uh, in five years may be equivalent to the three or four times you're gonna pay for another brand over time. And so growth is a, is a big factor there. Um, you adjacent wholesaler ha is sort of a mix of gross profit and then operating profit , uh, and then your new market is almost exclusively based on the operating profit that you're going to be able to generate from that operation. Um, the , uh, the , the kind folks at JP Morgan put together some pages , uh, and presented them to me a few months ago, which I found really helpful. Um, the first one is this, this one that we'll put up now, which is key value considerations. And it goes through, sort of at the top, you see the transaction multiple range. And this is based on multiples of ebitda. Um, you know, we talk about, I I like to use operating profit to measure how well we do as a business, but when you look at m and a, you're typically talking about ebitda, which is essentially operating profit, adding back any depreciation in amortization. Um, and, and obviously it doesn't include interest expense. So that's the, the I part of EBIT or ebitda. Uh, and the reason for that is to try to look at companies fairly consistently. Some companies own their assets, others lease their assets. And so it's to sort of equalize and normalize , uh, a company that might lease to a company that might own their assets. Is, is the big reason that , that you use ebitda and you see a range here of sort of 10 on the low end and 25 at the very high end , uh, as transaction multiples and, and what drives that ? So brand portfolio, we talked a little bit about that. How strong is a franchise protection in a particular market? What is the growth outlook , uh, for that brand portfolio? Those will impact how much a buyer is willing to pay, how valuable that is to someone , um, the geographic footprint and demographics in that footprint. Uh, am I buying something in the rust belt where you've got population decline, or I'm buying something in the Sunbelt where there's population growth , um, uh, in , in legal drinking age , um, and , and those sorts of , uh, elements. Is it close to where I am? Is it adjacent, is it overlapping or is it in a completely different , uh, geography from where I am ? Uh, customer mix , uh, lots of on-premise business, how consolidated and dense is the footprint versus , um, rural and, and , and whatnot. So for example, our business in Texas, we have some areas of San Antonio that are incredibly dense. Uh, and, and, and that's for us, I , i , that that's, I'm sure there are lots of other metro areas that are even more dense than, than what we have. And then we have some areas in rural Texas where we have drivers that , uh, may hit eight accounts a day. And so that's, that's another element of geography and customer mix that will determine whether you're a higher valuation or a lower valuation. Uh, we talked a little bit about synergies, fixed assets. If you own your assets, you're going to the , the , the buyer's gonna buy those from you, you're gonna get your money back out of those. Um, in my experience, you're typically getting around book value, but it also depends on how quickly you're depreciating things. If you're pretty aggressive on depreciation, you've got a lot of assets that have zero book value, there's gonna be value there that you're gonna recoup. Um, if you're leasing assets, then , uh, they're just gonna assume your lease and you'll be out of that obligation , um, for those. And then real estate and facilities are , is , is another element again, do you own it or do you lease it? And , uh, and , and what's that worth? So some of the value considerations that , um, that JP Morgan sort of outlined that I found pretty compelling and consistent with the way that we look at things. So I don't know Kerry or rj if you had anything to add to, to that.

Speaker 4: 37:03

Yeah, Orman, I'd love to add , um, just a couple of things with regard to the fixed assets and real estate side of things that , um, always need to be considered is due to changing accounting standards, right? The treatment of owned assets versus leased assets is different from a presentation perspective with , um, you know, now leased assets being established as a, what we call a right of use asset for which you then , um, it , you don't ex you know , technically , um, treat similar to how you would with a owned asset where you have just a depreciation expense, which to everyone's benefit gets added back for the EBITDA calculation versus the least , you know, lease truck asset leased , um, you know, equipment asset or lease real estate , uh, that is an expense of doing business and is not added back , um, for the EBITDA calculation, which can put a lot of people who , um, say their current operation is they typically own everything and they're acquiring , um, you know, a distributor, bolt-on that leases everything. That is something that goes into , um, covenant calculations and we'll get, touch that a little bit further on. Um , but this is something that when you're not used to seeing things from a financial presentation perspective, and now you have to, it can change how your , you know , um, your financial metrics are, are, are being calculated. Yeah .

Speaker 3: 38:33

Speaker 4: 38:33

Those are some things to be

Speaker 2: 38:35

Considerate of.

Speaker 3: 38:35

Yeah, and that goes back to the diligence too, is being able to look at the financial statements and understand what's there and, and , and really get to the underlying economic reality. Because you're right, RJ leasing a truck could be in your operating expenses a lease expense, or it could be a financial, financial lease and it could be in as depreciation and interest expense. And in one case, that makes it into ebitda. In the other case it doesn't. And you need to be able to normalize those numbers and look at it as a truck regardless of how it's accounted for in the underlying financials. Yep .

Speaker 2: 39:13

Good stuff .

Speaker 3: 39:14

Kurt , do you have anything to add to, to the ,

Speaker 2: 39:15

Oh , the only, the only thing I would throw in on that, and it's kind of maybe under the detailed categories , you know , relative to sort of these contractual obligations, maybe such as leases. So if you, if you're leasing a ton of trucks and maybe an acquired , they don't need 'em , you know , I've got their own fleet , um, unwinding those contracts can be things to think about. So I think RJ, you had alluded this to earlier that as you're preparing for sale, as you're making ready, as you're thinking about what do I need to do, the contract evaluation is an important piece as well. 'cause you, you might have these long tail obligations that like , well , how do I get outta this now? Yeah ,

Speaker 3: 39:51

That's a , that's a really good point.

Speaker 2: 39:53

So yeah, Orman , take us through the , uh, the , these are the slides I think that are just, I , I know people are gonna love these and ca and the cameras are coming out and it's great to see that . And so take us through , uh, these, these multiples. What what are we seeing ? Awesome.

Speaker 3: 40:04

Okay, so the first set of multiples, these are multiples of gross profit. And remember I talked before about the gross profit multiple is the most relevant when you're buying only brands or buying sort of very adjacent operations where there is some opportunity to bring things in. Uh, those are the most relevant. But these transaction multiples, you'll see there's a , there's quite a variation. There's a low here of, I see one of the, the red ones at 1.7 times and one of the blue ones at 7.4 times. So there's quite a variation , uh, in, in valuation. Uh, by the way, the blue bars here are Miller core anchored wholesalers. The red are ab uh, anchored wholesalers. And, and you see there's a little bit of a difference between the two. Um, as I understand it , the reason for that is for the most part, AB wholesalers are a little bit more AB focused and have less other brands. Molson cores , wholesalers tend to be a little bit more diversified and have , uh, more brands beyond the core, which is, I guess the reason that that most people point to for that slight difference in , uh, the average a BI multiple. And the average or median molson core is anchored , uh, multiple. But the , again, the variability just between the highs and the lows, even within the red and within the blue is really driven by, is this an overlapping transaction where I'm only buying brand rights? Those are those high, high bars there, the sort of six times plus, and then the ones that are down at the bottom, that is, that's most likely a less strategic market that is maybe a new market not connected to, to, to anything close by. Maybe the adjacent players don't have the financial wherewithal to be a viable bidder. Maybe it's just not the, not the time for, for them to, to be a , uh, a , a potential buyer. And so those are likely the lower and then the middle are probably your adjacent. So that's sort of that four and a half times. Now what, what generally happens when you roll out a slide like this? If I'm ever thinking of selling, what do I look at? I focus on that 7.4 times, I am worth 7.4 times I saw it on a slide. That's what I'm worth. Um, and, and that's fine. I'm sure you're worth a lot, but remember, what's, what's driving this is how valuable are you to someone else? And if you can, if your gross profit can fold into somebody else's business and it almost falls to their bottom line, you're gonna get 6, 7, 8 times gross profit. Um, but if you are in a location where someone's gonna have to step into your shoes and operate your warehouse and, and keep all of your employees and do things pretty much the way you're doing it , uh, they may find a couple of small efficiencies, but they're not gonna be able to pay six, seven, and eight times. They're gonna be paying three, maybe four times gross profit profit for that business.

Speaker 2: 43:00

Yeah, that's a great point. And it , it , it does underscore the importance of, of matchmaking too , that, you know, you can have some pretty good , um, pretty good looking numbers here, but you gotta , right , you've gotta find the right buyer, you know, if you're on the sell side. So RJ do you have anything to add on this, on the multiple side of , um, transactions?

Speaker 4: 43:19

No, IJ it just , um, interesting 'cause you know, we, we get into , uh, kind of the psychological emotional side of, of these kinds of transactions and like Orman hit on, you know, everyone looks at that slide and goes right to that top number and says, that's what I'm worth. Um, it , it can be very difficult to go through and say, based on rationalization of the numbers that, you know , you're not quite in that range. And we gotta kind of come down to reality of what, you know, people are going to assess our value as because it's to the buyer, right? Um, Orman hit on that, Carrie , you , you hit on that. It's the , the, it's the value is what someone is going to be willing to pay. Um , you see it in real estate, you know , um, based on inventory and things of that nature. If there's not a lot of people for sale and people want you, you'll get a little bit more out. But if you're, you know, offering the right things, if you're not, yeah, be willing to accept a , a slightly lower number if you want to get out.

Speaker 2: 44:23

The beauty of , um, these numbers, you know, if we're talking about a multiple of EBITDA or multiple, multiple of gross profit, is that if you're driving these numbers, if you're focusing on them and you're improving them, not only is it gonna help you in a potential future sale, but it's gonna help you right now. 'cause these are the , these are the operational metrics that you wanna be focusing on every day anyway, so it's sort of like in , in my opinion anyway, a double benefit is if you're trying to drive gp, if you're trying to drive, even if you're focusing on it, you know, you're engaging your, your managers and your leaders and understanding what it is, well , you can really drive that value and improve your, your current operating outcomes.

Speaker 3: 45:00

Yeah, that's a great point, Carrie . The next slide on these are really very similar. This , this one is not broken down between AB or Molson Coors . These are transaction multiples. So again, the, the, the slide before was just brand, the value of brand rights. This is now the value of the entire transaction. So this is brand rights typically plus inventory, plus fixed assets purchased and anything else that , that you're buying divided by the EBITDA of the business. And again, you see here some really high numbers and some some really low numbers. So there's a lot of variability and it pretty much falls again, in line with our , is is this really a brand right purchase or is there , uh, is this more of a standalone standalone business purchase? And you see the lows here are in the sort of eight times ebitda and the highs are up in the twenties and thirties. And, and again, those are gonna correlate with how valuable am I relative to the buyer? How much synergy are they going to get? And and it isn't that someone's paying 34 times ebitda, they're paying 34 times your ebitda, but to them it's probably somewhere in the neighborhood of 10 to 12 times ebitda. And that's generally where we triangulate to is somewhere, and , and maybe widen that range out a little bit more is sort of 10 to 14 times ebitda. And, and what really drives the , where you are in that range is how much growth there is. So if you've got high growth brands, then maybe we're gonna pay 14 times for you. If you don't have Constellation, we're probably gonna pay you closer to 10 times. And, and that's sort of the range to the buyer's ebitda. And so that's a , that's an interesting exercise to go through is think about who your potential buyers are, who do you overlap with, who is adjacent to you? And if they were to have my brands, what incremental operating expense would they have to add to my gross profit? And that's a pretty good proxy of what their EBITDA would be. And then look at that, at that 10 to 14 times range, and that gives you another data point for what your value could be in an m and a scenario.

Speaker 4: 47:07

And , and going off of that Orman, right? We , we , Carrie would talk about due diligence and really pounded on the numbers. We would , we would take something of this nature and really layered into , um, how much cash flow are we gonna get out based on these multiples in order to cash flow , you know, the debt , uh, payments, right? Um, and that, that's kind of the flow of , uh, where we're willing to put the final offer on is what annually, you know, are we pulling out of the business and making available for debt service , um, will , will kind of drive, you know, the payback period and, and what, you know , um, we end up calculating as the, the value to the business because , um, if you have a , uh, shorter payback period, then you're, you'd be willing to possibly go higher on the, the purchase price to get that business knowing that once you get a little bit further out , that bolt-on of additional gross profit and things of that sort, what that turns your business into, right? Because if we look down the line, it's, we have this deal, we work it through, we start paying it back, what's the next opportunity? How much cash will we have available to go after that next , um, opportunity? And or when you said like, if you get into a new market, it's starting to look at the adjacent territories within that new market. So how fast will we , will we be able to then target someone new mm-Hmm , <affirmative> , um, is relevant with, with this information? So

Speaker 2: 48:41

Thus far we've talked about target identification, right? Who's your buyer? Or if you're, you know, on the other side of it, who, who might you wanna acquire? We talked about due diligence. How do you approach this? What's the homework that you need to do? And obviously valuation comps. So hopefully people are starting to get a, at least a good overview of kind of what the, what the process is gonna look like. So once all that's done, what comes next, right? Because it's like, oh, the hard work's done, but if you're on the acquiring side, it's, it's really just beginning, right, rj?

Speaker 4: 49:12

Absolutely. Right. So , uh, say at this point we've, we've had the offer accepted and we've gone through the contractual piece of things . Now it's what is, what's next? What's, what's the new business look like? Um, so one of the things that we've seen from an internal perspective and Orman, you can , um, certainly share kind of your perspective , um, with, with a new business and new location, new territory, things of that sort is , um, how do we integrate our general ledger, our trial balances, our accounting software? Hopefully you're already on the same platform , um, to, to easily integrate the, the two , uh, two systems from a reporting perspective. But what our number one suggestion is always keeping the results kind of separated for that first year to really see what the impact is on both businesses , um, operating as a combined unit or, you know, in Norman's case, right? We have another, we distributor, you know , distributor we brought into the fold, how is that really impacting the global picture of the business? And we , we always suggest that because you can easily get lost in what , um, what costs we're incurring to, you know, facilitate the ha the sales and, and the operations of that new location. Um, and you never wanna lose sight of that comparability because if we didn't acquire and we remain the same, where would we be , um, unimpacted by having, you know , um, maybe adjusting salaries because this adjacent territory has a different cost structure for labor and things of that sort. We had to up our, our, our current staff to make sure that no one felt, you know, kind of slighted by that. So , um, a lot of that behind the scenes administrative stuff , uh, can be one of the biggest sticking points I think coming out of an acquisition. Um , like , uh, Orman said, you're right , we're , we're not buying, if we buy the assets, we're buying accounts receivable, we're buying inventory , um, what's that kind of , um, 90 day window as far as any adjustments to that working capital that we acquired. Um, a lot of the times that is kind of a , um, the continuing end of our engagements, Carrie , is staying on to make sure that we really look at the numbers to ensure that what we agreed to in the contract we're getting that value out of that. Or vice versa, if I'm the seller, if for instance, I had transferred more in inventory than we had previously agreed to that, you know, you get your due of whatever excess working capital , um, might, might be there. Um, that, that's, I I think an always entertaining thing is , um, you know, cutting things off from the old operation, establishing it for the new operation , um, getting a , um, a , a handle on the customers. Um, we, we've had clients that have acquired , um, adjacent territories and , um, work with very similar customers but still independent in different locations. Um, you could easily see how the follow up on receivables can get lost in that transition period to the point of having to potentially take a large , um, debt write off , you know, a , a bad debt expense write off because certain things weren't followed up on timely or, you know, part of the AR balance wasn't really vetted through that when we acquired it. There was a lot of outstanding ar um, that was wasn't collectible then and isn't collectible now. So , um, Orman take us through some of the examples of when you brought people into the fold. Yeah,

Speaker 3: 53:11

So, so to me there are two, what's next point , uh, points or two post acquisition points. The first one is after you sign the deal, and so you, you , you , uh, you work toward a definitive agreement, you sign the line and now you're committed. And , uh, one of the first things you have to do is you have to notify suppliers and go get the supplier approvals. You have to figure out , uh, and I , and I'm, I'm doing this really from the perspective of an , of an asset acquisition because again, we really avoid , uh, doing stock deals and , and , and I don't think I've ever done a stock deal in the beer business where we've had to pick up those , uh, um, those liabilities. But from , from a stock deal, the next thing you gotta figure out is who am I gonna employ and what roles and how much are gonna pay them? And so you've gotta interview the , uh, targets employees generally in the due diligence process. You have a little, you have sort of a sense of how you're gonna organize yourself and you start going toward , uh, putting in place that organization , uh, and hiring your salespeople, your warehouse people , uh, drivers, everything that you need. Um , you are retitling vehicles and maybe buying out leases, assuming leases. Uh, you, you've , you've already worked with your bank and you continue to work with your bank to secure the financing , uh, for the transaction , uh, and all of that, you're marching forward to close. The other big thing, and you mentioned this, RJ is the route accounting system , uh, our route accounting system, we went with VIP . Most of our targets, unfortunately are on, for , for us anyway, are on Encompass. And so there is a race to basically convert their data from encompass into our VIP system . So we've got sales history , uh, we have all the products set up, we have all the customers set up, and that's a very big lift, but we find it's much better to rip the bandaid off to, to really invest that time between signing the deal and closing the deal. So that day one, they're on our system and their reporting just folds in with our, our existing reporting. Um, and, and typically, and again, it depends on the transaction type. If we're buying brands, then those new brands are in our system. And if you wanna see how those new brands are going doing, you go and, and look at reporting on those brands. Uh, if it's a new operation, then it's a new branch for us and we've got all the, the, the reporting available for that branch. And so that's, that's a really heavy lift getting from signing the deal to closing the deal. And then post-closing, it is a matter of integrating your culture with their culture because now their employees are your employees and yours and ours , uh, yours and mine become ours. And it , it , that is sort of the next challenge. And , and so it's sort of a sprint that turns into a marathon. That's then when the marathon starts, or maybe you're a triathlon and you just did the swim and now you're on the, the long bike ride and run portion of of the event is what I would call after the acquisition closes.

Speaker 2: 56:16

Yeah . After RJ take us through. Um, and those are all great points. I mean, there's , there's so much to consider and that's a great rundown. rj, you , you've used the term a debt roadmap, which I hadn't really heard that before. I kind of like that. But, you know, debt's a thing, right? So we're acquiring a company or, or vice versa. Um, what do you , what do you mean by debt roadmap? How, how should someone think about that?

Speaker 4: 56:36

Right. So a a lot of times you , we, we talk about many different things. ebitda one thing. So , um, what we're seeing a lot with deals as far as , um, the financing side of things is , um, maintaining two financial covenants. One is, you know, your leverage ratio. Um , but more the important is the fixed charge coverage ratio, which is basically with your ebitda, can you pay the bank back, right? So , um, I would say at the baseline, the bank is looking to have 1.1 of EBITDA to every dollar of of debt, right? So what we, we always start down is, and , and this goes into, you know, Orman was talking about , um, the deal structure and things of that. And then working with your bank, it's having an understanding of what items go into your covenant calculations. Um, what sort of leverage do you have with one-off transactions are, are we able to add in or subtract those one-off , um, transactions by nature , um, is, you know , um, for fixed charge coverage ratio, is the capital outlay that gets added into the debt? Is that a set number? Um, what we've seen is say 10 cent, 10 cents per every ce. So that's kind of a, a set number that you're gonna have layered in to cover. Um, or is it what you're actually spending in CapEx? Um, how do distributions play in, do distributions for taxes get treated differently than just general personal distributions? Um, and then the bottom line is the bank wants their money back. So they're gonna start to lay out what their expectations are of that principal payment , uh, every year. Right? So getting into this debt roadmap, Carrie , it's, it's where are we starting and through operations? How are we going to be able to ensure that we get to the end of the end of the line? You know , um, Orbin says, you know, like a triathlon, how do we get to the end of the race and , and, and, you know, be on the good side of the bank all the way through. And we're seeing things recently with the economy and, and , um, things that have made that a difficult conversation. I, I will say that. Um, but it's, do we have the EBITDA to ensure that the bank is getting paid back and they're satisfied with what their risk exposure is? Um, we, we've seen some clients that have actually financed through a , like a , a line of , uh, like a revolving line of credit facility. Um , and , and that's interesting because you don't have in a, in a typical term loan where you get an amortization schedule that says, you know, month one, this is your payment, this is principal, this is interest month two, so on and so forth. With a line of credit facility, it's kind of like we expect you to pay 1.5 million annually, right? But you might not have to actually pay that, right? So you had this large number to cover, but the cash flow might not be where that needs to be, right? So you're not adjusting your use of cash because you're not paying off that line of credit at this time. You might be using its cover operating expenses because what you've accepted in, in this new entity, it might be more people than you need, might be more trucks than you need. Um, you might have been , you might be acquiring more inventory than you need to service your accounts. You may have lost an account. So there's , um, there's a lot of things that you need to be considerate of on a regular basis when it comes to staying on the good side of the bank. Um , because if you're not on the good side of the bank now and an opportunity comes up, that capital might not be accessible for you to continue , you know, your your long-term strategy.

Speaker 2: 1:00:39

Mm-Hmm , <affirmative> . So we've covered a lot of ground and we're , uh, just about out of time, but, so I'd like to give people just one takeaway from each of us. 'cause there's a lot, you know, a a lot of information. It's a lot to digest, but sometimes it's helpful to have just like one key takeaway and I'll start. And then Norman, maybe we'll kick it over to you and then rj Okay. So I'm just gonna pick up the thread of what RJ was laying down there, which is the one thing you have to remember is the deal has to cash flow . So we can do all of this , all of the fancy calculations in the world. We can do EBITDA multiples in gross profit, and I should be here or there and I want X, Y, and Z. But the bottom line is, if the deal doesn't cash flow , the deal doesn't work. Um , so to be really cognizant of looking at your financial plans, your pro formas , um, adjusting it for what the new combined entity's gonna look like, and really just beat that up and then execute on it. 'cause it's not enough to just have a great spreadsheet. I've done that, and then you , you don't execute and you're like, well , I had a great spreadsheet. So to have a, an implementation plan to make sure , you know, those synergies are realized to make sure the D deal does in fact cashflow. Mm-Hmm . So that's the one thing for me is it's got a cashflow. Orman , how about you?

Speaker 3: 1:02:00

Incredibly important. So , uh, I'll go a little bit different direction and I will say, understand your strategic value, and that's both as a buyer and a seller. So what are my targets worth? To me strategically, who is the most valuable? What's the next most valuable thing to , for me to add to my , uh, business and , and understand the, the range that some of those are highly valuable and some of those are less valuable. And the same token, if you are a seller, who are the closest overlapping wholesalers? Who are the adjacent wholesalers and who are other wholesalers who would find me valuable? I think that is one of the key things. And then understanding that difference in what makes you more strategic, more valuable, and what makes you less strategic, less valuable.

Speaker 4: 1:02:55

So I guess to wrap it up, I would say it's not gonna be easy and you will have to make tough decisions , uh, I think in all aspects of the process. Uh, but mostly on, on the tail end with regard to integrating teams together. Um, it's a tough thing trying to get everyone on the same page . Um, integrating systems. It's not easy. Orman said, you know, that that's one of the biggest lifts in, in an acquisition is getting everything on the same platform. Um, going back to the, the conversation around debt and, and what Carrie was saying with cashflow , um, you have to be willing to look at what the value you're willing to give up, and not necessarily value, but what you're willing to set aside from a ownership perspective that's, you know, your benefit in order to keep things going. So in the case of , um, having to set aside distributions , um, having to pull EBITDA from the current operation to fund the new operation , um, being willing to have to cut expenses or cut labor force where it might be overburdening the business. Um, because we all always have to take that future forward looking perspective of, if we compromise today, what's that ripple effect? It , it will shift through all the way through the future. So be willing to make the tough decisions to keep things moving forward. Because with an acquisition, you want the staff to be happy. You want your employees , um, engaged and excited. And if you have to kind of put your benefits on the back burner for the time being to ensure that happens, it , it's a very difficult decision. The sale process, it's emotional, it's psychological. There's a lot of family rooted , um, distributors out there. So you have to contend with what this means to the family. Um , what , what , how does that change the identity of things? Um, so it's, it's a , it's a bit more of a cerebral process and people wanna , you know, say it is.

Speaker 2: 1:05:11

Absolutely. Mm-Hmm , <affirmative> , there's a lot involved. Well, RJ Orman, fantastic. Thanks so much. So for now, we'll, we'll open it up to questions if anybody has anything , uh, that they would like to ask , um, and if not, we'll be available after you've got our contact information. But we just want to thank everybody so much , uh, for your time. We know it's valuable. We hope you got some value out of this presentation. Thank you very much.

Speaker 1: 1:05:35

Thank you for listening to the Beer Business Finance podcast, where we combine beer with finance so that you can improve financial results in your beer distribution business. For more resources, tools, guides, and online courses, please visit beer business finance.com. Don't forget to sign up for the free weekly Beer Finance newsletter. Until next time, get out there and improve financial results in your beer business today.