News Lord Hobo Sells Stake to Private Investment Firm

Discussion in 'Beer News & Releases' started by brother_rebus, Sep 8, 2017.

  1. brother_rebus

    brother_rebus Crusader (750) Jul 28, 2014 Pennsylvania
    Beer Trader

  2. SunDevilBeer

    SunDevilBeer Zealot (521) May 9, 2003 Massachusetts

    LOL Lanigan's just a capitalist shill like the rest of 'em despite how hard he lived & marketed the hipster-hero brand - which was a facade to whoever visited his overpriced bars/restos or observed his entry into brewing with middling quality hoppy ales.
     
    matthewp, tolar111, tzieser and 8 others like this.
  3. emannths

    emannths Initiate (191) Sep 21, 2007 Massachusetts

    Some interesting tidbits:
     
  4. chipawayboy

    chipawayboy Zealot (527) Oct 26, 2007 Massachusetts
    Subscriber Beer Trader

    Beating on DL and the LH brand -- a BeerAdvocate NE forum tradition since 2014! :stuck_out_tongue:
     
  5. Leebo

    Leebo Initiate (129) Feb 7, 2013 Massachusetts

    Some of the beers are not bad, I just have better options these days. Never got over the changing recipes and taste profiles during the first year. Expanding markets? Or more shelves for the beers to sit and age? Power to him if he gets some good footing on a national basis.
     
    VABA likes this.
  6. rousee

    rousee Meyvn (1,031) Aug 13, 2004 Massachusetts

    I'd say it goes back way further than that. Try Moan and Dove days--and has a lot to to do with his lousy "I'm the shit" attitude.
     
    tzieser, AlcahueteJ and SunDevilBeer like this.
  7. DaaaaBeers

    DaaaaBeers Initiate (173) Oct 9, 2015 Massachusetts
    Beer Trader

    Middle of the road beer that never lived up to the hype he tried to build up. They also went into market with a beer that wasn't even close to ready, wasn't BS a blend of two other beers originally?

    Anyway, good luck to him I suppose, dust doesn't discriminate.
     
    harsley, tzieser and PatrickCT like this.
  8. brother_rebus

    brother_rebus Crusader (750) Jul 28, 2014 Pennsylvania
    Beer Trader

    *3 iirc
     
  9. FJ88

    FJ88 Initiate (135) Jun 11, 2015 Massachusetts

    I agree 100%. Crap beer. D-bag attitude.
    Good luck.
     
    SunDevilBeer likes this.
  10. woodchipper

    woodchipper Crusader (700) Oct 25, 2005 Connecticut
    Subscriber

    I thought VC's were supposed to be smart. I think its a great time to be a beer drinker and a horrible time to be a beer investor.
     
    Haybeerman likes this.
  11. Sweatshirt

    Sweatshirt Aspirant (230) Jan 27, 2014 New Hampshire
    Beer Trader

    I mean good for him. Hopefully mediocrity continues to serve the brewery well. Can't really hate on that. They got $30 from me since they opened. I won't be funding any of thier future.
     
    babaracas, tzieser and PatrickCT like this.
  12. cavedave

    cavedave Poo-Bah (2,191) Mar 12, 2009 New York
    Beer Trader

    Lord Hobo is def. one of the top 150 breweries in Massachussetts.
     
  13. ichorNet

    ichorNet Defender (693) Mar 16, 2010 Massachusetts

    Though I followed the hype and its nearly-immediate backlash fairly closely in 2015, I must say I have enjoyed several LH products since that time.

    Recent batches of Boom Sauce have been quite solid (here's my review from last June, though I have had it since and it's been just about as good), and I've liked Glorious (Galaxy-hopped pale ale) and Consolation Prize (pretty recent review here) as well. Seems like they've dialed in alright. The guy seems like kind of an (overly-)ambitious dickhead, and I've noticed Zwanze Day has not been a thing at the Lord Hobo bar for the past couple years... definitely wondered if his move to "brewery owner" has played into that considering he has been friends with JVR for quite some time. That's another topic for another thread, though, I suppose.
     
  14. HorseheadsHopHead

    HorseheadsHopHead Meyvn (1,018) Sep 15, 2014 New York

    Everything I've had from Lord Hobo thus far has been amazing, but I will admit that this is a bit amusingly hypocritical of them, considering how arrogant and douchey they were at the beginning.
     
  15. Oktoberfiesta

    Oktoberfiesta Aspirant (277) Nov 16, 2013 New Mexico
    Beer Trader

    Shouldn't they work at capacity until some debts are paid off? Do any of these places make any money? This sort of growth feels highly unsustainable.

    I found their beer utterly average. Hundreds of better options all around that region. You can expand into every region around, but 3-5 years down the line when growth points of sales are no longer around, and your beer is still collecting dust, what do you do?

    I like the satellite brewery concept more than anything else, as that breeds freshness.

    Do these breweries ever settle in? It just sounds like they are ready to be bought out in a year or two. A full buy out.
     
  16. JackHorzempa

    JackHorzempa Poo-Bah (2,973) Dec 15, 2005 Pennsylvania
    Supporter

    Private Equity investing in another small, craft brewery. I suppose we should start our timers until this business is flipped?

    @Sixpoint
     
  17. Sweatshirt

    Sweatshirt Aspirant (230) Jan 27, 2014 New Hampshire
    Beer Trader

    It is. When your growth is based almost fully on flooding new markets with beer you will stall. They will be in way over thier heads by the end of 2019.
     
    harsley likes this.
  18. Sixpoint

    Sixpoint Poo-Bah (1,556) Jul 25, 2004 New York
    Supporter Subscriber Beer Trader

    By very definition, a traditional private equity firm (in this arena, one that invests in consumer goods) will most certainly look to exit their position within 4-7 years. So yes, you can start your timer.

    Look for LH to ratchet up production, open up a bunch of markets for distribution, and then sell to attempt to get a quick ROI.
     
  19. drtth

    drtth Poo-Bah (3,091) Nov 25, 2007 Pennsylvania

    Historically, when private equity and/or venture capital firms were only willing to buy majority ownership in exchange for their money, etc., that was mostly true. However, things seem to have been changing somewhat as private equity investors are becoming more willing to buy a minority share in healthy companies in exchange for what the fund can bring to the table (e.g., money and some sort of expertise that helps develop the company). It seems that typically in the latter case the equity funds help build the company before selling their minority share, either back to the original owners but at its increased value, or to some other outside investor.

    So there seem to be some important differences between selling a majority share and selling a minority share of your healthy business. (Lord Hobo sold a minority share.)

    https://www.kirkland.com/siteFiles/Publications/8E62BE0BF5EC88C8FCDEF4065D6180E3.pdf
     
    #19 drtth, Sep 9, 2017
    Last edited: Sep 9, 2017
    Haybeerman likes this.
  20. AlcahueteJ

    AlcahueteJ Defender (629) Dec 4, 2004 Massachusetts

    Say what you want about Lanigan and his beers, but one thing he doesn't appear to be is a poor business man.

    Ultimately selling his brewery is one of the first things I thought of after seeing this thread.

    Maybe I'm naive, but on the surface it's the only play that makes sense. The tap room isn't packed like Nightshift, there's no lines for their beers like Tree House, and their flagships don't fly off the shelves like Lawson's.

    I realize their production is likely far greater than all of those breweries, but I still find it hard to believe the bulk of the profit isn't solely from rapidly expanding into new markets.

    Which invetidbly will catch up with you....unless you sell out.
     
    matthewp, Haybeerman, tzieser and 4 others like this.
  21. EnronCFO

    EnronCFO Devotee (487) Mar 29, 2007 Massachusetts
    Beer Trader

    The timing assumes the investment was done within a PE fund with a finite life. This is a no-name group with zero track record (formed in 2015), so it's tough to tell what the plan is.
     
  22. rgordon

    rgordon Crusader (702) Apr 26, 2012 North Carolina

    God, thanks Dave. A good early Sunday laugh just woke up my dogs! Thank God it's a "boutique" private equity group and not one of those strip mall types. There's hope here. Looking forward to seeing Riley Baugus at The National Folk Festival here in a few hours.....and many others.
     
    cavedave likes this.
  23. brother_rebus

    brother_rebus Crusader (750) Jul 28, 2014 Pennsylvania
    Beer Trader

    he hasn't been very secretive about the hopes of being bought out by Big Beer.

    secondly, I would think twice about calling him a good businessman. he's a good convincer and chumer, but from what I can tell, pretty mediocre at business™
     
  24. SunDevilBeer

    SunDevilBeer Zealot (521) May 9, 2003 Massachusetts

    Hear u WRT his beers, but I always need to link Lanigan to his horrible hipster-nonsense bar in Cambridge. It was preceded by NYC haunts that were just as horrible.
     
    tzieser likes this.
  25. breadwinner

    breadwinner Meyvn (1,146) Mar 6, 2014 California
    Beer Trader

    Hahaha, was just commenting in another thread about this. The NE board and other BAs may shit on these guys, but my friends/family in the area swear by the stuff. These same friends/family wouldn't dream of waiting in line at Tree House, much less driving out of their way to get Trillium, but you better believe they'll stop by their local bottle shop for Boom Sauce. I just think it's hilarious that LH gets shredded on here, as though how could anyone be dumb enough to buy their lousy beer, but meanwhile in the broader marketplace they seem to be doing just fine (and arguably appeal to the casual craft fan more than the more heralded breweries in the area).
     
  26. emannths

    emannths Initiate (191) Sep 21, 2007 Massachusetts

    Nah, the only thing that took a beating in 2014 was the LHBC hype train--I believe the joke was that BS cracked the BA Top 250 before anyone had tasted it. It took 9 months for people to actually try their beers, with most of the early comments ranging from "it was pretty good" to "it was the worst beer at ABCF."
    [emphasis mine] I think this is the difference. At this point the beer is perfectly fine and probably worthy of inclusion with other regional hoppy beer depending on the price and date. But the guys botched the rollout by selling $17 4pks of shitty test batches that were pitched as the closest thing to Heady Topper you could get without a 3hr drive, and backed it up with a go-fuck-yourself attitude.

    If it's just another beer on the shelf, sure, the backstory doesn't really matter. But in the BA community, where one snotty sour or a whiff of outside capital can make a brewery non grata, it shouldn't be too surprising that LHBC gets the cold shoulder.
     
    AlcahueteJ and reefer_bob like this.
  27. EvenMoreJesus

    EvenMoreJesus Disciple (362) Jun 8, 2017 Pennsylvania
    Supporter

    Interested as to why you would say this, as I think it's a pretty good time to be both. If you're well informed, that is.
     
  28. Haybeerman

    Haybeerman Poo-Bah (2,225) May 21, 2008 Colorado
    Supporter Subscriber Beer Trader

    Or bets...which will be finished first, this thread or Lord Hobo?
     
    AlcahueteJ and ManBearPat like this.
  29. EnronCFO

    EnronCFO Devotee (487) Mar 29, 2007 Massachusetts
    Beer Trader

    I'd rather be selling than buying right now. Case in point: https://www.brewbound.com/news/wormtown-brewery-co-founder-sells-remaining-stake-exits-company

    “Craft beer as a whole is reaching its peak and, in my opinion, will level out a bit,” he said. “You always want to sell at the peak, and I was given an offer I could not refuse.”

    Oliveri added that the multiple paid by The Clarke Group to acquire a minority stake was “7 times” greater than what Fields paid for a majority stake in 2014.
     
    AlcahueteJ and EvenMoreJesus like this.
  30. MouthBreather

    MouthBreather Initiate (132) Dec 7, 2013 Massachusetts
    Beer Trader

    I knew something was up. They actually hired sales reps and they expanded into a lot more territories. Never been a fan personally both with the beer and the way they handle their business.
     
  31. Sixpoint

    Sixpoint Poo-Bah (1,556) Jul 25, 2004 New York
    Supporter Subscriber Beer Trader

    All breweries, from Sierra Nevada to Sixpoint to Lord Hobo to the little nanobrewery making 1 barrel at a time down street need capital in order to grow. If a company has high aspirations and desires to undertake big development plans, they will need even more capital. Brewing as an industry has always been a very capital-intensive endeavor.

    Private Equity, by its very nature, will look to rapidly scale a business with an infusion of capital, high-powered management teams, and pulling certain levers on SKU proliferation, opening of markets, etc. all in the name of an inevitable exit in 4-7 years down the road; typically when the fund is retired and there is a mandate to return the seed capital + proceeds to the original investors. You are going to see a ton of liquidations in the next 5 years or so in craft beer due to the extraordinary number of private equity deals that have been completed recently. Look out below!

    Alternatively, a brewery may finance their expansion with debt, but of course if the debt payments cannot be serviced, a default on the loan can be declared and the brewery can go into bankruptcy and the assets can be seized. What recently happened to Magnolia Brewing and the The Commons goes to show when you over-expand and do not have the cash flows to sustain your business.

    If you're lucky, you may come from wealth or have a "rich uncle" who will continue to grow your business ad infinitum. But absent that option, this is why many breweries are looking to recapitalize as the industry continues to change and evolve. There has yet to be a single, successful long-term Private Equity owner in the craft beer space, so we will see if that recapitalization option works out well for people in the long run. IMHO you'd be better off hitching your wagon to someone who has a longer timeframe than the mandatory quick exit.
     
    FonyBones, JackHorzempa and drtth like this.
  32. Jason

    Jason Founder (8,093) Aug 23, 1996 Massachusetts
    Staff Subscriber

    How different is this from scores of other brands that have taken on investors to start or when they start to feel growing pains? Every single brewery started is out to make some money ... so what if they were a bit braggadocios. So he's a shill for taking on a different investor? He created a product to sell, what did you expect out of him? Would love to hear more. I'd expect this if it was AB Inbev ... not sold on your point but feel free to expand on it. Not being snarky, just would love to hear more.
     
  33. breadwinner

    breadwinner Meyvn (1,146) Mar 6, 2014 California
    Beer Trader

    Good background, and I readily admit, as a non-Northeasterner, I didn't know that was the origin of the hate. For BA readers, those sorts of things would definitely cause some backlash (and rightfully so, IMO).

    I do wonder, though, whether the types of people perhaps more akin to buy LH, who probably aren't BA people, even noticed or cared about the shitty test batches and douchey attitudes. Which is worth mentioning because sometimes BA types will wonder, "Who would even drink stuff from this brewery?! Why wouldn't they drink from (insert preferred brewery)?!" I think part of the answer is that a lot of people just don't pay as close attention and don't otherwise care - it's local, it fits the zeitgeist, and you can get it at your local bottle shop. Even if/as, BA might otherwise shit on it.
     
    Sheppard likes this.
  34. EnronCFO

    EnronCFO Devotee (487) Mar 29, 2007 Massachusetts
    Beer Trader

    Have we confirmed that the Lord Hobo investment came from a PE fund? There are groups that seek to be perpetual owners, investing from their own balance sheet and for growth and cash flow rather than a quick exit. Call it the Buffett model.
     
  35. drtth

    drtth Poo-Bah (3,091) Nov 25, 2007 Pennsylvania

    From the fund website:

    http://www.valterrapartners.com/#valterrapartners
     
  36. JackHorzempa

    JackHorzempa Poo-Bah (2,973) Dec 15, 2005 Pennsylvania
    Supporter

    It is Valterra Partners who is investing. On their website they state:

    “a private investment firm focused on US growth equity investments in alternative asset”

    http://www.valterrapartners.com/

    This sure reads like a PE firm to me but I am not a CFO. What do you think?

    Cheers!
     
  37. EnronCFO

    EnronCFO Devotee (487) Mar 29, 2007 Massachusetts
    Beer Trader

    Subtle difference between firm and fund. Funds have a term, firms don't. This group has zero track record and I could only source one prior investment (a nursing home) from 2015. So it's tough to make assumptions about who they are as investors or where the Lord Hobo investment is held (fund vs balance sheet).
     
    AlcahueteJ likes this.
  38. JackHorzempa

    JackHorzempa Poo-Bah (2,973) Dec 15, 2005 Pennsylvania
    Supporter

    Perhaps you can educate me further. I always associate the words of "firm" and "PE" as in a "PE firm". Am I not doing this properly? Should I instead be stating "PE funds"?

    From what you stated above, is the association that a PE firm has no time horizon in mind for realizing profits of their investments?

    Cheers!

    @Sixpoint
     
    AlcahueteJ likes this.
  39. SunDevilBeer

    SunDevilBeer Zealot (521) May 9, 2003 Massachusetts

    I have no problem with him selling out, as I don't for any other brewer either.

    However, as stated in my previous post DL always positioned himself as some anti-establishment bad-ass. The long beard, tattoos, in your face brash proclamations of how awesome his bars were (even tho they were overpriced ripoffs IMO). And the grand predictions of Heady T - like beer available on a large scale for us, the plebes! Then to top it all off he shows thin skin at even the slightest criticism of any of his ventures.

    But at the end of the day, he's just some shmuck who wants to make as much $$ like the rest of us.
     
  40. Wasatch

    Wasatch Poo-Bah (4,973) Jun 8, 2005 Colorado
    Beer Trader

    Just found one of their beers here in GJ a couple of days ago. I liked it, Glorious. Was surprised to see it around.

    Cheers!
     
    Jason likes this.
  • About Us

    Founded in Boston in 1996, BeerAdvocate (BA) is your go-to resource for beer powered by an independent community of enthusiasts and professionals dedicated to supporting and promoting better beer.

    Learn More
  • Our Community

    Comprised of consumers and industry professionals, many of whom started as members of this site, our community is one of the oldest, largest, and most respected beer communities online.
  • Our Events

    Since 2003 we've hosted over 60 world-class beer festivals to bring awareness to independent brewers and educate attendees.
  • Our Magazine

    Support uncompromising beer advocacy and award-winning, independent journalism with a print subscription to BeerAdvocate magazine.