In 2020, companies across the globe experienced challenges that had previously only been hypothetical scenarios posed by business school professors. Fast forward to 2023: taking their learnings from the unprecedented events of 2020, businesses are exploring capital preservation and unique, flexible financial solutions that will support their company through the next economic challenge. Throughout this article, we will walk through how Wells Fargo completed a transaction for a new customer, working to find a solution suited to fit their needs in a unique and dynamic industry.

Over the years, asset-based lending (ABL) has become a sought-after financial solution because of its flexibility, fewer financial covenants, and potential to provide greater cash availability. As management teams face unpredictable and unprecedented challenges, they need malleable capital structures in place that can move, stretch, bend, and grow as the business adapts to economic headwinds and trends. The popularity of ABL continues to expand, and the buildout of a capital structure may be comprised of various financial products that complement each other to support a company. Let’s explore how asset-based lending works. 

Neat, please!
Dr. Rob Arnold, president of Advanced Spirits and a native to Louisville, Kentucky, is the fifth generation of his family to work in the beverage industry. Holding years of experience, awards, and accolades for his sophisticated approach to whiskey, Arnold was tapped by investment firms Park Partners Capital (PPC) and Sallyport to help the whiskey industry achieve accelerated and sustained growth through a business structure new to the beverage market.

Notably, Advanced Spirits had a vision to not only make whiskey, but to create a company that would take the industry to the next level through different touchpoints of the process. To do that, Advanced Spirits has three pillars of offerings: (1) barrel financing programs for other whiskey brands, which provide customers the option to purchase barrels in the future; (2) supply solutions to contract distillation space and purchase aged whiskey for immediate market consumption; and (3) industry expertise consultation in ingredient selection, distilling, and blending to create premium whiskeys. 

As the business began, investors explored capital solutions from financial providers and knew that this unique approach to the whiskey industry would also require a unique capital structure. They soon realized that their current lender was not able to grow with them, and other financial institutions they spoke with could not meet their capital needs.

Having exhausted a handful of financial options, PPC vice president Cory Hall, who is a former Wells Fargo banker and investor in Advanced Spirits, reached out to his colleague at the bank to brainstorm creative financing solutions that the Wells Fargo team could develop. “Our approach provides financial flexibility, inventory access, and technical expertise to help whiskey companies achieve accelerated and sustained growth,” said Hall.

To understand the complexity of the beverage market and the financial needs of industry companies, let’s take a quick whiskey class. Unfortunately, there will be no tastings at this class. Sorry. 

Please click here for the full article.