In a hybrid management buyout and employee stock ownership transaction, Odell Brewing will sell 70 percent of the company to brewery employees, co-founder and CEO Wynne Odell told Brewbound.
The deal, first announced late last night, will see 51 percent of the company transferred to three members of the executive management team — director of sales Eric Smith, COO Brendan McGivney and CFO Chris Banks. 19 percent of the company will be sold remaining brewery employees (currently 115).
Brewery founders Wynne, Doug and Corkie Odell will each retain 10 percent of the company.
“We’ve anointed ourselves as founders for life,” said Wynne Odell. “We will hold on to these shares and we may still be hoisting pints in the taproom when we are 90.”
In the more immediate future, the Odell family will remain active in their roles (Wynne serves as CEO, Doug serves as founder and Corkie serves as HR director) for at least five years, at which point control of the company will shift to the executive management team of Smith, McGivney and Banks. That group also personally invested in the buyout, Wynne Odell said.
“Economically, they own shares but not control,” she said. “That will take about five years to pass.”
The company financed the transaction with a bank loan, Wynne Odell said.
So why did the brewery founders ultimately decide to turn the company over to its employees?
“I think we were fortunate that this all got pulled together at a time when the craft market is hot,” Wynne Odell said. “This was where we were headed for a long time, trying to pull this together and knowing that at some point we had to start stepping back from the business some. Pair that with the fact that our management team was very interested in taking over control of the company.”
Although the company had been considering an ESOP transaction for years, the deal only began to seriously take shape six months ago.
“I would say the first thing that held us back was truly understanding what an ESOP was and how it worked,” she said. “Setting it up, doing your due-diligence on the administrative and financial sides and figuring out how you’re going to fund it.”
The company declined to share specific financial details. Prairie Capital Advisors acted as an advisor to the Odell Brewing ESOP (a previous story inaccurately listed Prairie Capital as the company’s financial advisor).
Odell is projecting sales of 115,000 barrels in 2015 and will soon install a canning line and begin filling 12 oz. cans. Packaged in 12-packs, core brands IPA and 90 Shilling will make an appearance in aluminum later this year.
The brewery itself is capable of being scaled to 400,000 barrels. With the addition of extra fermentation tanks, and the canning line, capacity will grow to 250,000 barrels, Wynne Odell said. The installation of another lauter tun will bring total capacity to 400,000 barrels; a production amount that Odell admitted is many years away.
“We plan to stay regional,” she said, noting that the brand is still only sold in 11 states. “We will add states selectively as it makes sense. We are not hell bent on high growth.”