In August 2021, George Kastendike, CEO of Three Notch’d Brewery (Three Notch’d) in Charlottesville, Virginia, laid down the phone as he finished a conference call with two of his early investors. In the eight years since Three Notch’d was founded, the company had performed well and opened multiple facilities both in and outside of Charlottesville. The brewery had also emerged as a well-known regional player whose products could be purchased at grocery stores, convenient stores, and gas stations across the state. Despite the success, there still was no clear plan to return cash to the investors by selling or recapitalizing the business. Kastendike had been investigating potential options. It was possible to sell to a macrobrewer and join its portfolio of craft breweries, as nearby Devil’s Backbone had done a few years earlier. He was also considering a rollup strategy analogous to ones that private equity companies executed in other industries.
As usual, the two longtime investors had been well prepared but also full of questions. Their core issue was one that had always been at the forefront of Kastendike’s mind: What was the exit strategy for Three Notch’d?
This field-based case is accompanied by a student spreadsheet that enables cost-structure analysis. This case is taught at Darden in Operations Strategy.