Sue Field, a Reynolds Advisory Partners Managing Director, was hired by three boyhood friends who founded Snapple to realize the best value for the Company. The outcome was a recapitalization through a sale to Thomas H. Lee Company, a leading private equity firm, where the three owners retained a significant equity position. Shortly thereafter, Sue again advised Snapple and Thomas H. Lee as Snapple completed an unprecedented round trip IPO less than a year after the sale with the management team augmented by senior packaged goods leadership. The original founders saw the value of their public stock ownership exceed the original cash proceeds they received on the private sale. In time, an acquisition of 100% of Snapple by Quaker Oats, which owned Gatorade, monetized this value, and more, as an acquisition premium to the IPO price produced even further financial gains to the original founders.
By most standards, the founders' beginnings were humble. Hyman Golden and Leonard Marsh, brothers-in-law, ran a window washing business on Long Island, NY. Marsh's childhood friend, Arnold Greenberg, owned a health food store. Together, they began selling pure fruit juice, acquired the Snapple trademark for $500, and produced an apple soda that fizzled. After much experimenting and the passage of over ten years, they created a line of ready-to-drink teas. Five years after that, it was Snapple, not Nestea or Lipton, that was the best selling iced tea in the US. The three Brooklyn boys, none of whom had graduated from high school, and their Baby had people asking for Coke, Pepsi or Snapple!
As the first company to produce a complete line of all-natural beverages, Snapple made its mark as being “Made From The Best Stuff On Earth”. Snapple's explosive growth, powered by its national roll-out, was historic as case sales rose from 2.8 million to 55.6 million in just five years. With revenues topping $500 million from only $25 million five years prior, the key strategic question for the original founders, in their sixties, was how best to plan for their families' financial future recognizing that the meteoric growth could continue, but could also plateau, or worse, fall off as sometimes happens with niche products competing against huge corporations.
A team of bankers led by Sue Field guided the founders through an exhaustive sale process targeting both strategic acquirers and financial buyers. When the sale process began, case sales were on pace to double from 12.5 million to 25.0 million - but the question was how to get buyers to pay for the explosive growth? During the critical summer months when sales are strongest, the bankers did something highly unusual. Sue advised the company to slow the transaction timeline down to let the growth be realized for two months, materially increasing the value of bids. She also worked with the founders to demonstrate that an offer from corporate buyers, while certainly affirming the brand equity, could be worth less than partnering with a private equity firm, expanding the management team and retaining a significant equity stake that could be monetized through an IPO and/or subsequent sale. When accounting challenges needed to be addressed during final round due diligence, the bankers, the private equity firm, and the founders all worked together as a team to assuage the commercial banks' concerns. The rest is history.
This case demonstrates that clients come first - even if it means the deal takes longer to complete. It also exemplifies the full range of expertise that Reynolds Advisory Partners' bankers can bring to bear - from relationships with corporations and private equity firms, to strategic counsel, to technical accounting, and tax skills.