Lightening things up for a beverage company

How we helped

• Consumer Products
• Mergers & Acquisitions 
• Corporate Strategy & Transformation

Controlling distribution seemed like it would give a major beverage company power. The company had acquired its largest distribution partner as a means to both ring out excess cost but also streamline and integrate decision-making. Owning a larger piece of the distribution infrastructure was supposed to improve competitiveness and power dynamics. The problem? Running distribution was incompatible with the company’s strategy and core competencies.

AlixPartners advised that divesting to a set of smaller, nimble and focused partners would maximize value for this entire system and for the company itself. That left the problem of carving out the assets.

Finding the right deal structure

As market conditioned deteriorated further, initial discussions with potential buyers were complicated by uncertainty over future growth expectations. Each party was at an impasse. 

AlixPartners devised a novel earnout structure that satisfied the company’s target transaction value but provided enough security for the buyers. We also led the development of carve-out financials and were front and center with the company through complex negotiations, due diligence, and the closing.

The transaction scope was originally limited to distribution. Following a detailed scenario analysis by our team, the company agreed that adding manufacturing to the scope made the best economic and strategic sense, especially given the company’s core business. 

Putting the plan into action

Over the course of over 100 individual transactions, we assisted the beverage company with operational challenges, including:

• Creation of new governance system addressing transfer pricing between the expanded set of distribution partners
• Transaction implications of a new shared services organization and IT system for carved-out territories
• Rationalization plan for stranded costs and capital

The path laid out by AlixPartners in partnership with the company set it up to deliver a material change in top-line growth, double its profit margins and resulted in a faster growing, more profitable, leaner and more focused client company.