LNK Partners Gets 15% Dogfish Ownership

FILED SEPTEMBER 29, 2015

Dear Client:

Yesterday Dogfish chief Sam Calagione shared the following news with employees. They'll give New York-based LNK "a modest 15% ownership position." One more for the private equity succession plan camp.

"Today, I am excited to announce that Mariah and I added a new asset as external support to Dogfish Head - LNK Partners," he wrote. "You are likely thinking, who or what is that? Well, they are an incredibly smart and experienced group of people who have worked with companies of all sizes and styles like Levi's, Performance Bicycle, Gatorade and Calvin Klein [and Panera] to help those guys achieve their goals in their respective industries. LNK is making an investment to own 15% percent of our company." As we reported via large news outlets earlier this year, Dogfish has "accepted a number of meetings over many years in order to better understand the plays that other craft breweries could or would be making.

"But while these conversations happened, our talks have always been prefaced by our steadfast desire to remain a family-controlled and family-led company. We remained firm in that position no matter who was sitting at the other side of the table pitching us their deal and we still do today. We went into our introductory meeting with LNK as if it would be our only, but rather found that the result was a robust and thoughtful dialogue about Dogfish's solid and unique position in the craft beer industry. We walked out of the meeting thinking perhaps we should rethink those original assumptions. ..."

"THREE DEAL BREAKERS": "During the process of getting to know each other, the value in partnering with LNK became clearer, for while we have been approaching our world through the lens of craft, they could bring different exposures and experiences to help adjust that focus," Sam wrote. "In so doing they could provide the food for thought we had yet to sample. As the possibility of a partnership continued to crystallize for us, all that remained was their agreement around our three deal-breakers. 1.) acceptance that this would not be a path toward IPO, majority ownership or any other position that would be counter to our commitment to remain a family-controlled and family-led company, 2.) alignment in holding holy to our off-centered culture as an ideal to be treasured, and 3.) acceptance that we will always choose smart growth over fast growth. End of story. Not only did LNK get on board with our priorities, but they respected them; they were energized around them."

Bottom line, this means that at the "Dogfish Board of Directors level there will be one representative joining who will bring some diversity of thought and experience to that group. Additionally, they will be acting as thought partners for Mariah, Nick and I to challenge us, provide sounding board and offer other best practice advice. We contemplated whether filling our voids could be just as easily achieved through the work of a rock solid consultant but in the end Mariah and I agreed that allowing LNK to take a modest 15% ownership position would provide the skin in the game that would align us to winning."

David Landau, Managing Partner at LNK, said Dogfish is a "rare combination of a great management team and a great brand."

Until tomorrow, Jenn

"Some people like my advice so much that they frame it upon the wall instead of using it." - Gordon R. Dickson

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