Business Red Blends: Mergers and Acquisitions

Business Red Blends: Mergers and Acquisitions

It seems that lately there have been quite a few mergers and acquisitions going in the wine industry- from suppliers to wholesalers to customers. The big guys are getting bigger. And bigger. It appears you either have to get really big to compete, or stay small and out of the way. It has, for lack of a better term, caused a bit of unsettling in the industry.  

Back in 1981, when I was a technical sales engineer, I interviewed a company- Gettys Manufacturing-  in Racine, Wisconsin. They were a dynamic, growing $20 million servo drive (like I said, technical stuff) manufacturer. It was an awesome interview- everybody at the company liked their job and what they did and felt a connection to their customers. I interviewed in January, was offered the job in early February, and on my first day of work, March 1, 1981, they announced effective that day that $20 million Gettys had been acquired by $3.5 billion Gould. Mergers and acquisitions don’t happen in two weeks. More like two years- at least. Through the whole interview process they knew this was happening, yet not a word. It didn’t take Gould too long to step in and bury the brand.

Throughout my thirty plus years running my sales and consulting businesses, I witnessed far too many “surprises” like that with customers, clients, and associates. It didn’t matter what industry  - food service, industrial automation, electrical wholesale, food machinery, newsprint, healthcare, or banking- they all went through the same thing. The relationships established were blown up by an icy letter, phone call, FAX, or email. Of course the people who benefited were the ones left standing, but the fact is few if any acquisition specialists understand how to value- and evaluate- talent and relationships. Talent and relationships are not line-items on a balance sheet or an income statement. And then they do the ultimately stupid, egotistical thing by removing the old brand name and inserting their name instead, as though to say “good riddance” to the people and the brand they just bought. It makes you wonder why they bought it to begin with- keep it away from the competition? Bury a competitive brand?

The challenge for big business is it cannot achieve growth objectives promised to stockholders by growing through sales- also known as organic growth. Well actually they could with the right culture, but it is too hard for large corporations to grow organically. John Houseman would call that the “old fashioned way: earning it”. But that is too hard to do. They need to get bigger in chunks by acquiring markets already developed by another business.

Small businesses on the other hand are organic growth stories. They grow their business through customers, not acquisitions. They are beholden to their customers, not their stockholders. Big difference.

After 40+ years of financial involvement by John Cushman and twenty-seven years of ownership with his twin brother Lou, they have decided to find a new steward for Zaca Mesa Winery to carry on what has been built. Unlike my experience at Gettys and most of these transactions, they chose to go public to find the buyer who did value the brand, the talent, and the relationships. From my perspective as General Manager, this is an absolutely refreshing approach, because they have been transparent throughout this process, which is so unique. How many times have employees, customers, partners, and suppliers found out a business was for sale only when it was already sold- and their jobs, relationships, and reliance on the brand vaporized in a terse message that essentially said, "Thank you- what was, is not anymore and never will be again. Good bye."? 

The Cushmans are not doing that. They won't do that. That is not who they are. We have 17 full-time employees- all of whom have full medical, dental, and vision coverage that includes covering their families. That, along with a 401k plan and Zaca Mesa's benefits package is the envy of most businesses in the area. And every year for the last three years that we have had increases in coverage cost, the Cushmans have not waivered on keeping the coverage intact. Three employees (almost 20% of the full time force) have worked here over thirty years.

When John Cushman comes to visit the winery during one of our many events, he loves to sit with the club members and customers and talk to them. He doesn't arrive in a limo with an entourage or announce who he is- he just mingles as though he is just another person enjoying the great food, the music, and fabulous wine in an absolutely beautiful setting. He genuinely enjoys the wine and the atmosphere at Zaca Mesa. John will certainly expect to have that same level of enjoyment at Zaca Mesa from whomever succeeds he and Lou. They like their Zaca Mesa wine and fully expect to enjoy it going forward. So, whomever the Cushmans approve to take stewardship of Zaca Mesa going forward will be expected to build on the brand that they have created, not bury it.