A winery and vineyard merger and acquisition advisory firm has expanded from Washington and Oregon into California to capitalize on the state’s significant market. The firm anticipates increased transaction activity while navigating current market uncertainties.
A Pacific Northwest wine business merger and acquisition firm has expanded into California with the hire of a longtime financial adviser to the industry.
After nine years of focusing on Washington and Oregon deals, Metis, based in Walla Walla, Washington, has hired Lance Spears to lead the practice in the Golden State.
“The lines of demarcation (in the wine business) between Oregon, Washington and California are just getting blurrier and blurrier,” said founder and CEO Erik McLaughlin.
Some North Coast vintners such as Jackson Family Wines and Crimson Wine Group also own wineries or vineyards in the Pacific Northwest.
The firm sees significant opportunity in California, the nation’s largest wine market. The state accounts for 81% of U.S. wine production and would be the world’s fourth-largest producer by itself, according to the Wine Institute and WineAmerica.
Despite a current slowdown in wine industry transactions, McLaughlin hopes a “flurry of transactions” is imminent next year.
“Buyers are just very, very cautious. They just want to do the exact right deal,” McLaughlin said.
Shifts are underway in the industry because of market pressures and strategic respositioning, and generational transitions, such as the handing off from one generation to the next the ownership or control of a business.
These shifts have potential acquirers focused intensely on solving specific business challenges through targeted transactions.
Buyers are prioritizing brands that demonstrate growth and profitability, seeking opportunities to diversify portfolios through strategic acquisitions, McLaughlin said. This includes expanding into new varietals, geographic regions, price points and sales channels. The current market demands precise “matchmaking” between buyers and sellers, with less broad-based interest and more intentional, carefully evaluated opportunities.
“If it’s good assets with a broken business, buyers are generally not very interested unless the pricing gets very, very aggressive,” McLaughlin said. That’s a change from the prepandemic market when buyers may have been more willing to work with challenged enterprises.
The bankruptcy of Santa Rosa-anchored Vintage Wine Estates a year ago “took all the oxygen out of the room” for other wine M&A deals on the West Coast, he said. With large discounted valuations for the brands and assets that sold, that put pressure on other vintners who were seeking to lower the prices for their businesses or assets by smaller proportions.
“You can’t help but drive up and down the road or go to a few industry conferences and see, wow, there’s a lot of stuff that needs to be moved,” Spears said.
Spears started in the wine industry in 2003 as chief financial officer of Seguin Moreau Cooperage in Napa, rising to president two years later. Since 2009 he has been operating a Napa consultancy, offering CFO services to vintners along the West Coast.
“If this starts to scale up, then we’ll start to beef up the team,” Spears said. Currently, he will operate solo with back-office support from the Northwest team.
Over its nine-year history, Metis has completed about 50 transactions, primarily in the wine sector. Recent notable transactions include the sale announced in May of Oregon’s The Radiant Sparkling Wine Company to Vinovate Custom Wine Services.
McLaughlin described the current M&A landscape as challenging, with buyers becoming increasingly cautious and selective.
Metis early this year spun off its hospitality practice led by Chris Garratt as Birch Creek Advisors so that Metis could focus exclusively on wine industry transactions. The firm currently has six team members, including market leaders McLaughlin in Washington, Kristin Marchesi in Oregon and now Spears in California.
The expansion into California represents a strategic move to serve a broader wine market and position the firm for anticipated future transactions.
“We want to be established in California and serving this market, so we’re in position as that activity picks back up,“ McLaughlin said.
Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.