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The Rise and Fall of Bethenny Frankel’s “Skinnygirl” Brand Linked to Her Popularity’s Demise #RHONY @Bethenny #Bethenny

How to Value Your Company

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Whether you’re looking to raise a round of capital or sell your company, it’s important to understand how to value your company.We’ll take a look at Fortune Brands’ acquisition of Skinnygirl for an easy-to-follow example.

Revenue Estimates

We first develop revenue estimates to determine whether or not this transaction is in fact comparable to the company we are valuing. Revenue estimates are also helpful in creating financial forecasts. In other words, you can use comparable company data to project your own company’s growth.

We estimate revenues for Skinnygirl by gleaning press releases and researching prices.

We know a case of Skinnygirl costs $125. This is likely not the dollar amount received by Skinnygirl, but we will use this for our example. The sales volume for 2010 and 2011 can be found here. A Skinnygirl executive stated that Skinnygirl was 2% of Fortune Brands’ total sales in 2013. A press release noted that sales were down 26% from 2012. From this data, we arrive at the estimates below:

2010 = $18,881,250
2011 = $73,250,000
2012 = $68,000,000
2013 = $50,000,000

Valuation Estimates

When companies are acquired, there are two main components – up front payment (in cash or stock) and contingent consideration (commonly referred to as an earn-out). An earn-out is a payment that is contingent on future performance, such as sales volume. If the acquired company hits all sales goals it will get 100% of the earn-out.

I took a look at publicly available documents to determine the acquisition price of Skinnygirl. It was announced in 2011 that Fortune Brands (now Beam Suntory) would pay a maximum of $28 million in an earn-out to Skinnygirl. According to SEC filings, they made the following payments:

Q1:12: $2 million paid out for 2011
Q1:13: $8 million paid out for 2012
Q1:14: $6 million paid out for 2013 (estimate)

At the beginning of 2013, there was an $18 million balance on the earn-out. At the end of the year, it was stated that there would be a $12 million benefit due to revised sales volumes. SEC filings noted, “The substantial decline in Skinnygirl is largely due to the substantial decrease of the U.S. ready-to-serve spirits category in 2013.” In plain speak, Skinnygirl did not meet the earn-out requirement, so $12 million was reversed in the books. We estimate the earn-out payment for 2013 at $6 million.

The 3 year earn-out yielded $16 million, instead of $28 million.

In the 10Q for the first quarter of 2011, it was reported that Net cash used in investing activities for the three months ended March 31, 2011 increased to $72.7 million primarily due the acquisition of the Skinnygirl cocktail business. This tells us the price was at most $44.7 million ($72.7 million – $28 million). With a revision to the earn-out, the final price was at most somewhere near $60 million ($44.7 million + 16 million). We can cross reference this number by looking at other comparable transactions.

In March of 2012, Fortune Brands paid $605 million for Pinnacle vodka and Calico jack rum, which reportedly sold 3.1 million cases of liquor in 2011, which would equate to $297 million in sales. That gives us a revenue multiple of 2x. Skinnygirl reportedly sold 151,050 cases in 2010 with revenue of $18.8 million, the year prior to their acquisition.

Based on 2010 sales, Skinnygirl would be valued at approximately $37.6 million.

Optimizing Your Acquisition

In this example, $12 million was left on the table when sales in 2013 dropped drastically. I believe sales were driven in large part by Bethenny Frankel’s ability to stay in front of, and connect with, her audience. Unfortunately, 2013 was the year she left Bravo for Fox and went through a nasty divorce. 2013 was also the year that her fan base turned on her. I don’t think this is a coincidence.

When your personal brand is your corporate brand, it is critical that you are presenting yourself in a consistent manner. It pays to keep your dirty laundry behind the scenes and by all means ignore the trolls. I’m not claiming it’s fair, but it’s reality. No pun intended.

This article previously appeared on http://www.financeforentrepreneurs.co

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About bitchbybravo (369 Articles)
Blogging under an alias so I don't have to kill you after reading....

8 Comments on The Rise and Fall of Bethenny Frankel’s “Skinnygirl” Brand Linked to Her Popularity’s Demise #RHONY @Bethenny #Bethenny

  1. deborah luper // July 16, 2017 at 2:29 pm // Reply

    she was a better person early on…maybe…but never my favorite…and her peeing in a bucket at the wedding…taking pregnancy test on camera…all the over the top BS…plus she used her poor husband…he derserves a lot of money…but more than that…lucky to be away from her toxic, needy, screeching id…not a good person …clearly…and i would never buy her products…never have…it is tacky.

    Liked by 1 person

  2. My domain change misplaced the original link to this article. Former address to this blog was jmbettsyou.wordpress.com

    Like

  3. I’ve never bought anything with her name on it and never will..I was at a store and her veggie chips were selling for $1 a bag ! So, I took that to mean this store got a wonderful deal on them if they can sale them that cheap!!!

    Liked by 1 person

    • bitchbybravo // June 12, 2015 at 11:00 pm // Reply

      We have a wonderful chain in California called “Grocery Outlet.” They have had her 3 piece skincare sets sitting on the shelf since Christmas. Nobody wants her stuff.

      Like

  4. So her brand is going down as much as her popularity. Poor barfenney it’s just not fair. IMO it’s just plain common sense that it’s a good idea to refrain from putting any of yur personal business on display 4 ppl to pick apart as every1 has an opinion. So what does she do, but go on a reality show & demonstrate some of the most embarrassing behavior I hav evr seen. How’s that working out 4 u Barfenney?

    Liked by 1 person

    • bitchbybravo // June 12, 2015 at 9:37 pm // Reply

      She’s so egotistical now. Lost me ages ago when she dumped Jason and was mean to his family? Done! Poor Bryn is going to be damaged like her mom……#sad

      Like

  5. Reblogged this on .

    Liked by 1 person

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