Buy-Side Advisory

decosimo corporate finance

About Coca-Cola and Seven-Up Bottlers

In the late 1890’s, two Chattanoogans obtained the rights to bottle Coca-Cola across the nation. By the late 1970’s, there were over 3,000 independent bottlers. Our client, Carl Navarre, was one of the first to recognize the opportunity of rolling up these independent bottlers. Employing aggressive financing based on pro-forma cash flows, Navarre built the publicly traded Coca-Cola Bottling Co. of Miami – the consolidation of 17 bottlers. After his departure from the industry, we continued the work in rolling up the industry.

Company Profile

In the late 1890’s, two Chattanoogans obtained the rights to bottle Coca-Cola across the nation. By the late 1970’s, there were over 400 independent bottlers – and clear synergistic benefits to rolling-up the industry. Our client, Carl Navarre, was one of the first to recognize this opportunity. Employing aggressive financing based on pro-forma cash flows, Navarre built the publicly traded Coca-Cola Bottling Co. of Miami – the consolidation of 17 bottlers. We had the privilege of working for and learning from Mr. Navarre. After his departure from the industry, we continued the work in rolling up the industry.

Client Objectives

Mr. Navarre, and bottling acquirers, wished to acquire other Coca-Cola bottling companies throughout the United States, utilizing debt and equity financing.

Maximizing Value

Mr. Navarre, and bottling acquirers, wished to acquire other Coca-Cola bottling companies throughout the United States, utilizing debt and equity financing.

Disciplined Process

First, we identified the best target – a target that would either provide a base for future synergistic acquisitions through density or a target that would be an already synergistic acquisition. Then, we performed a detailed study of the historical financial performance of the target to ascertain the cash flow the target is capable of generating, either on a standalone basis or as an add-on (depending on the circumstances of the target in relation to the acquirer). We then performed a detailed financial forecast of cash flows from operations. This forecast is is a calculated look into the future operations of the target based on past performance, and considers any synergies, and, often times, a new way of doing business. Due to the intricacies of the industry, our forecasts started out short-term, on a monthly basis, taking into account seasonality. Our forecasts also considered the current capacities, bottle-necks, and capital expense requirements required for the buyer to achieve that growth.

Armed with the knowledge gained from our forecast, we then determined a price that could be paid for the target. This price is not a theoretical fair market value, but rather investment value – the value for the target in the eyes of the specific buyer. Using a thorough understanding of historical operations and a solid forecast for the future, we can then calculate certain prices that the buyer could pay and still achieve a targeted return on the equity after utilizing various methods of financing.

Our forecast allowed an understanding of how much senior debt, asset-based lending, cash flow financing, and subordinated financing will be available, and we could also forecast what those forms of financing will cost. After calculating how much equity investment would be required, we determined what return on equity the buyer would receive by making exit assumptions five to seven years out.

Proven Results

Our valuation and transaction expertise allowed us to give our clients a clear picture of which targets they should consider, how much they can spend on a potential target, how and from where they could finance the transaction, and what their return would possibly be. This disciplined process resulted in our successful leading of the acquisition and financing of more than 100 bottlers. These successful transactions included the bottlers in Miami, FL; St. Louis, MO; Cincinnati and Dayton, OH; Western Kentucky; Jackson, Natchez, and Greenwood, MS; Fayetteville, Fort Smith, Rogers, and Pinebluff, AR; Chicago and the state of Illinois; Indianapolis and the state of Indiana; Portland, OR; Seattle, WA; and San Francisco, CA.

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Decosimo Corporate Finance, LLC

819 Broad St. Chattanooga, TN 37402

(423) 266-4000

Monday – Friday: 9AM – 5PM

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