Q3 Innovation Essay
WEEK 5 / ASSIGNMENT 1
Case Analysis: Nantucket Nectars
PRO’s & CON’s
Tom Scott and Tom First founded Nantucket Nectars in 1990 as a small side-business on Nantucket’s Straight Wharf. A peach fruit juice drink that Tom First discovered while visiting Spain inspired him and his partner to embark upon the journey of building their juice company. After only six years, the two entrepreneurs built a business that was generating $29,493,000 per year in revenue and $969,000 in EBITDA. With remarkable success came exciting opportunities, as well as challenging decisions. Specifically, Tom and Tom were faced with the dilemma of taking the company down one of three roads including: taking the company public via IPO, selling the business, or continuing to grow and run the business independently. Tantamount to these decisions, the founders had additional questions on their minds – How should the company be valued? How could they ensure price maximization? How would the negotiations be handled? Could they engage potential buyers without existing employees find out? At the end of the day, the decision was more personal than anything. It’s never easy for an Entrepreneur to rationalize “selling out” after they’ve spent so much time building and developing their baby. Nevertheless, it’s often the best decision. In this paper I will explore the Pros and Cons of selling Nantucket Nectar, along with how to determine an appropriate value for the company. The first option to be explored was remaining independent. One of their concerns was management involvement of any potential strategic partner, or buyer. Tom and Tom wanted to run the company, if possible. If they remained independent then they would still be the autonomous owners of Nantucket Nectars and they wouldn’t have to worry about listening to anybody else telling them how to operate, or grow the company. Also, a benefit of remaining independent was the preservation of the company’s brand which was built
Case Analysis: Nantucket Nectars
PRO’s & CON’s
Tom Scott and Tom First founded Nantucket Nectars in 1990 as a small side-business on Nantucket’s Straight Wharf. A peach fruit juice drink that Tom First discovered while visiting Spain inspired him and his partner to embark upon the journey of building their juice company. After only six years, the two entrepreneurs built a business that was generating $29,493,000 per year in revenue and $969,000 in EBITDA. With remarkable success came exciting opportunities, as well as challenging decisions. Specifically, Tom and Tom were faced with the dilemma of taking the company down one of three roads including: taking the company public via IPO, selling the business, or continuing to grow and run the business independently. Tantamount to these decisions, the founders had additional questions on their minds – How should the company be valued? How could they ensure price maximization? How would the negotiations be handled? Could they engage potential buyers without existing employees find out? At the end of the day, the decision was more personal than anything. It’s never easy for an Entrepreneur to rationalize “selling out” after they’ve spent so much time building and developing their baby. Nevertheless, it’s often the best decision. In this paper I will explore the Pros and Cons of selling Nantucket Nectar, along with how to determine an appropriate value for the company. The first option to be explored was remaining independent. One of their concerns was management involvement of any potential strategic partner, or buyer. Tom and Tom wanted to run the company, if possible. If they remained independent then they would still be the autonomous owners of Nantucket Nectars and they wouldn’t have to worry about listening to anybody else telling them how to operate, or grow the company. Also, a benefit of remaining independent was the preservation of the company’s brand which was built