FINANCE
bright spots in the California economy,
and banks are starting to notice that. It's
very profitable, but there's a lot of risk.
You better know what you're doing
when you get into ag lending.
Has deal size
on M&A or loans
changed?
Rob McMillan: Yes, if you're working
on real estate, that goes up. In addition,
the rollup players have a tendency to
move prices up. Multiples are increasing
as well—not to top-of-the-boom multiples, but still very healthy. Purchases that
are happening are good deals, not troubled, so the prices go up.
Sales multiples are all over the map
because the wine business is not a homogeneous model; some don't own vineyards, some do. If you look at a normal
period, in a normal business environment, you'd expect to see businesses selling in the eight to 12 times EBITDA
range. You probably move that up to 10
to 14 times EBITDA in wine.
Vic Motto: Deal size is shrinking.
Partly because of distressed deals, partly because valuations on deals are
shrinking, and partially because there
are not as many large offerings. Consolidation has substantially happened,
not taken a pause.
We're seeing smaller transactions.
Most of the large winery consolidation
has slowed as larger wineries have consolidated. Valuations are tighter, but you
must distinguish between distressed sales
versus sales of functioning businesses,
as there are both types happening.
ERNie HODGES:
spots in the
Mark Brody: Deal size is about the
same for those of us that play on all three
categories: small, medium and large. Medium ($5 million-$25 million loans) is
where we will spend most of our time.
Very large deals will tend to be multibank deals, and we'll do those as well.
If you look at the large companies,
they're buying up vineyards. We're seeing
a lot of confidence expressed, at least by
California
economy, and
FINANCIAL SERVICES/BANKING/LEASING
Company Name
Phone
Website
AXA Equitable Finance
(209) 471-3622 axa-equitable.com
banks are
American AgCredit
(800) 800-4865 agloan.com
starting to
Axton Wine Group LLC
(707) 320-2304 axtonwinegroup.com
BMO Harris Bank
(415) 354-7510 harrisbank.com/commercialbank
Bacchus Capital Management
(415) 828-8898 bacchuswinefund.com
Bank of America
(707) 525-2205 bankofamerica.com
Bank of Marin
(415) 884-4583 bankofmarin.com
Bank of the West
(707) 501-5150 bankofthewest.com
Benedict Venture Group
(509) 956-9463 benedictventuregroup.com
Comerica Bank
(415) 477-3277 comerica.com
Exchange Bank
(707) 524-3102 exchangebank.com
Farm Credit West
(800) 909-5050 farmcreditwest.com
First Community Bank
(916) 774-7192 fcbconnect.com
First Republic Bank
(415) 392-1400 firstrepublic.com
Fresno Madera Farm Credit
(559) 277-7000 fmfarmcredit.com
Global Wine Partners
(707) 967-5315 globalwinebank.com
Hansel Leasing
(707) 544-2822 hanselleasing.com
Mechanics Bank
(707) 256-4343 mechanicsbank.com
Mission Capital
(707) 431-2678 missioncapitalfund.com
PricewaterhouseCoopers LLP
(415) 498-6270 pwc.com
Prudential Agricultural
Investments
(916) 789-4071 www3.prudential.com/
businesscenter/realestate/pmcc
Rabobank NA
(707) 545-6887 rabobankamerica.com
Silicon Valley Bank,
Wine Division
(707) 967-1367 svb.com
Terroir Capital LLC
(805) 617-3670 terroircapital.com
US Bank
(912) 942-9466 usbank.com
Umpqua Bank
(707) 252-5020 umpquabank.com
Union Bank
(707) 968-9514 unionbank.com
Wells Fargo Insurance Services
& Commercial Banking
(707) 769-2900
cybersure.com
Wells Fargo Wine, Food
& Beverage Group
(415) 222-4646
wellsfargo.com
notice that."
PERRY DeLUCA:
"The market
is very
competitive,
and the
continues to
intensify. Banks
are competing
very heavily
on deals."
For more information about financial service, banking and leasing suppliers, see Wines & Vines' 2013
Buyer's Guide in print or online at winesandvinesbuyersguide.com.
Perry DeLuca (Wells Fargo Bank) is the industry head and team leader for
Wells Fargo's Wine, Food & Beverage group, based in Santa Rosa, Calif. He has
worked in wine industry finance for more than a decade. Prior to joining Wells
Fargo, DeLuca was the national head of Wine & Spirits/Beverage Distribution
lending at Cleveland, Ohio-based KeyBank. He is an associate member of the
California Wine Institute.
34 W in es & V i ne s s e pt e m b e r 20 13
ly. They're still ratio-driven: If you don't
make the ratios, they don't want you.
"Ag is one of
the real bright
competition
Quinton Jay: On the M&A side, deal
sizes are relatively the same because of
the way the wine business is. Large conglomerates fill up holes and have specific
ones to fill, e.g., Constellation and Mark
West; they needed a Pinot Noir at that
price point. For (those sort of) transactions to happen for the big guys, a winery
needs to be of a certain size before it's
interesting and yummy. They're not looking for 10,000 to 12,000 cases.
Beyond those large consolidation
deals, deal sizes have always been the
same. Deals at the 20,000-50,000-case
level, up to 100,000, are where the majority fit, and that's why deal sizes are
always going to be the same.
On the banking side, with the economy
getting better, you're getting more lenders
coming into the mix. More banks are
coming in, but they're coming in cautious-
Ernie Hodges (Farm Credit West) is executive vice president of Farm Credit
West, where he has been since May 2008. Prior to that, he served as president
and chief executive officer of Sacramento Valley Farm Credit. He serves as a
member of the Farmer Mac Board of Directors and is a member of the California State Fair Agricultural Advisory Council.
