Craft beer is a trendy industry right now, and with good reason. As the boom of craft breweries continues, it’s bringing triumphs and challenges for these startups, and we’re seeing an emerging wave of acquisitions. But the most common question we hear from founders is: “Is selling really just selling out?” These founders are passionate about what they do, often having started up not in pursuit of a big cash out, but rather a love of the perfect pint.
The question of “selling out” resonates beyond just the craft beer world. It makes us wonder: Is selling a startup to a larger corporation a dilemma or an opportunity?
Beyond our affinity for tasting small batch brews, there are a few key business lessons to be learned by following the trends in both big beer and craft beer. How are these craft beer acquisitions changing the game within their industry and who is benefiting from these changes in ownership?
These are realities that extend well beyond the beer industry. Many businesses face dilemmas brought on by growth once their industry becomes part of a trend and they start to prosper. Watching craft beer startups evolve into Big Beer business players can teach us a lot about growth and exit opportunities.
Lesson #1: Lead your team through a major change with your culture intact.
Defining who you are at the core of your business will determine the direction it goes and what it will look like in the future. When we think of craft beer we immediately envision the love and earnestness that goes into creating the ideal product; the product intimately reflects the culture of the company. It’s growing by sourcing and selling locally, spreading its reach through word of mouth, and relying on personal testimonies of how good the beer truly is.
In other words, being acquired or “selling out” to a big manufacturer strips a brewer of his/her craft beer status. But are the words “craft brewery” just that—words, a title, or does this change of ownership affect how things are run, and for better or for worse?
Any ownership change will require leadership to think strategically about preserving the unique culture of the organization. What made your culture special when you were a small startup? How can you carry the best of those attributes forward into a new, larger reality? How does your product (or service) reflect the culture of your business?
Understanding and defining your company’s culture is an important first step. Effective management consistently communicates core values to their workforce until it becomes second nature. Ultimately, once those values become part of a company’s DNA, it’s hard to change—acquisition or not.
Lesson #2: Assess if a change of ownership affects how things are run, and for better or for worse?
Now that some craft brewers are turning to the dark side, how are they faring? These former craft brewers—the ones that are now owned by Anheuser-Busch InBev—seem to be maximizing their change of ownership by still running the show. They are on-site, at their same locations, and with their same head brewers. They vow to maintain the quality of their product, and are thrilled with the newfound ability to produce more product than ever before and reach more customers. The only downside noted is that they now have a boss to report to.
The upside? Their new bosses have deep pockets. Now these small breweries that were running off the “every last dime” of their beer aficionado founders can experiment a little more with less regard to the risk/return and price tags associated with the creative process. This has led to new batches produced in wine and whiskey barrels, and brewers taking chances on more seasonal brews.
Beer lovers would say this is a win for those of us always looking for the next new taste. The acquisitions have also vastly expanded the reach of these once only locally enjoyed breweries. The distribution chain of Anheuser-Busch extends beyond nationally to international markets as well. Another win: More people can savor these tasty concoctions and speak of their cleverly named beverages afar.
Finding the right acquisition partner can put your company in similar standing. Instead of losing your identity, the right partner can help expand your identity to an even larger audience.
Lesson #3. Accept that selling to a larger company may be an opportunity rather than a dilemma.
Selling doesn’t have to be selling out—it can be selling up. By hitching your wagon to a larger player, you are gaining access to deeper resources; you gain the freedom to chase larger opportunities and dreams, the ones that resource constraints prevented before. Sure, some acquisitions are quickly assimilated into the mother ship. But done right, selling to a larger firm simply means taking some cash (and risk) off the table while providing a platform for bigger and better things.
Just like each craft brewery that is offered a deal must weigh its philosophical conscience against its business growth desires, so too must startups across nearly all industries who have invested blood, sweat, and tears into their businesses.
What do you sacrifice as you grow? Is it worth it? How will you seize opportunities and lead your business through major change by fully embracing the silver lining on the other side?
This article was first published on All Business