No One-Size-Fits-All: Navigating M&A Decisions in a Challenging Wine Market

In mid-January, I had the pleasure of joining Rob McMillan, Janie Brooks, and Matthew Owings for Silicon Valley Bank's State of the Industry broadcast. If you missed it, the recording is now online. We covered a lot of ground, sharing practical examples of what's actually working for wineries right now. One theme kept coming up across all our conversations: operators can't rely on what worked before and expect the same results. We all need to be taking action and adapting.

My focus was, of course, M&A. And there's no denying that this is an incredibly challenging time to sell a winery or vineyard. We don't know what the market will look like over the next couple of years. But here's what I keep telling clients: deciding whether it's the right time to sell isn't simply about what's happening in the market. There's no one-size-fits-all answer right now.

Option 1: Invest and Build for the Future

Some wineries should be investing in their businesses and building for the future. If you have the time, capital, and energy to work on your business—not just in it—this might be your path. Maybe that means refining your distribution strategy, investing in your direct-to-consumer channels, or improving operational efficiencies to increase profitability.

The key question here is whether you have a realistic plan to improve the business fundamentals that buyers care about: profitability, brand strength, customer base, and operational efficiency. If you can make meaningful progress in these areas over the next 12-24 months, waiting might be your best decision. But you need to be honest about whether you have the resources and bandwidth to execute that plan.

Option 2: Wind Down Operations, Hold the Real Estate

For others, this might be a good time to quietly stop making wine, sell through your inventory at your current margins, and look to sell your real property once you've wound down your business. This isn't giving up—it's being strategic about maximizing value.

If your winery operations are breaking even or losing money, but you're sitting on valuable vineyard land or property, separating the operating business from the real estate might make sense. The wine business and the real estate business have different timelines and different buyer pools. Sometimes the smartest move is to exit the operational side cleanly and hold the land until the real estate market is more favorable. This approach also removes the pressure of trying to run a struggling business while simultaneously trying to sell it. Or, being left with inventory you need to sell without the real estate that currently animates the business. These options will take a lot of self-discipline, but can ultimately maximize the value of both your inventory and your real estate.

Option 3: Sell Now, Regardless of Market Conditions

And then there are situations where this is simply the right time for you or your business to sell, regardless of what's happening in the larger market. Maybe you're facing health issues, partnership conflicts, or you're just ready for the next chapter of your life. Maybe your business is still performing well, but you can see the writing on the wall and you'd rather sell from a position of strength than wait until things deteriorate further.

Personal circumstances matter. Market timing matters less if you have a compelling reason to exit. Yes, it's harder to sell right now. Yes, you might not get the multiple or asset value you would have gotten three years ago. But if the alternative is burning through capital, damaging your health, or watching your business decline, selling now might still be the right call.

The Role of Advisors

Most importantly, when working through your options, talk to your advisors—your accountant, your attorney, your banker, and yes, your M&A advisor if you're considering a sale. Each of these paths requires different expertise and different timelines. Selling is an intense process, and sellers need to be realistic and ready for the ride. Your advisors can help you stress-test your assumptions and make sure you're seeing the full picture.

Radical Honesty

What all three of these paths have in common is the need for radical honesty. You need to be honest about where your business actually is, not where you wish it was. You need to be honest about your personal capacity—financial, emotional, and physical. And you need to be honest about what buyers are actually looking for in this market, not what they were looking for five years ago. You also need to understand your goals in order of importance. Maximizing your financial return is often the primary goal. However, for some operators, their priority is to find the buyer for their business, winery, or vineyard who appreciates what they’ve built and will be a good steward moving forward.

The wine industry is going through a necessary reset. The decisions you make now will determine whether you come out the other side stronger, or whether you spend the next few years struggling against forces you can't control.