AboutEric Hofer Expertise Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.
Experience Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets.
Designed 2 handheld systems, the latest is now deployed in 4 markets internationally.
Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators.
Developing software: Progress, VB, Access, C, Sybase, SA
Organizations Innovative-Selling Solutions
Publications BudapestSun
Education/Credentials State University of New York - BA Economics
NYU - Courant - Graduate work - Computing
Past/Present clients PepsiAmericas
PepsiCola International
PepsiCola Company
British Steel
British Telecom
Britvic (Pepsi's bottler in the UK)
AT&T
BellSouth
Mars Overseas Bottling
Pepsi France
Matutano (Frito-Lay Spain)
Frito-Lay
Pepsi Foods International
Chase Manhattan Bank
Kidder Peabody
National Power
SmithKline Beecham
Mars Overseas Bottling (Pepsi Azerbaijan)
A&P Bottling (Pepsi Serbia & Montenegro)
Iberia Bottlers (Pepsi Georgia)
Question We are starting a beverage company and want to enlist distributors. In order to enhance the distributors positions we want to offer them equity contracts in the event of the sale of the company or if we decide to take distribution in a different direction. I would like to offer them a per case payout based on annual volume. What would be a fair amount per case?
Answer Sharing any sort of equity involves considering several items, e.g. the amount of risk, duration of such a risk, amount (money, service, etc.) invested vs the other partners; opportunity cost, etc.
There's insufficient information with which to give you an idea of what that percentage / amount might be; that is considered fair.
However, on buy outs there are some rules of thumb - though I'm not the one to answer as an expert. One that I've seen is for on-going sales the value is 7 times 1st year of earnings. In this case, if you figure that they made say 4 cents per case, then the value of the share would be 28. Again, though I caveat this with what I said earlier - there's no indication of how much they actually invested; nor are there safeguards against "trade loading" used to get volume up in year 1 for a later buy-back.
If the volume in sales offered saves you significantly say in marketing, staffing, etc., then the percentage you'd offer should be higher. If on the other hand, all they're doing is offering you capital for 1 year of sales - then why would you pay more than say 2 or 3 times the cost of capital?
