Real Leaders

Case Study: To Sell or Not to Sell?

Anna Rivera faces a decision that will affect the future and legacy of her company.

Anna Rivera, founder and CEO of Organics Now, had just hung up the phone with the CEO of a well-known global consumer goods company, Christopher Chen. His words were still ringing in her ears: “Anna, we’re ready to make you a strong offer on Organics Now.” The price Chen named would provide Rivera and her investors a hefty premium that was hard to pass up.

Still, Rivera knew she had a lot of mental hurdles to clear before she would seriously consider selling. The practices of the consumer goods company, one of the largest producers of processed foods, was an anathema to her core principles.

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Thirty years ago, Rivera radically changed her and her children’s diet to a plant-based one, and the subsequent positive effects on their health and quality of life fostered a passion for healthy food that led her to form Organics Now. From humble beginnings, the company had grown into a leading producer of organic, grab-and-go food products that Rivera hoped would change people’s lives, just like her family’s plant-based diet had changed theirs.  

Chen had assured Rivera that acquiring Organics Now would be the first step in transforming the global company to having a healthier focus, but Rivera was skeptical. Could a Trojan Horse model of change really work? She had heard the story of acquisitions gone wrong many times before, and she couldn’t fathom having all she had worked to build being acquired and overshadowed by the practices and culture of a trans-national company.

On the other hand, Rivera wondered if the acquisition could scale her influence in the market place, allowing her to continue pressuring the industry toward healthier products. Although she could not deny the attractive aspects of selling, at the same time, she could not shake this very same company’s TV commercials pushing high-fructose products on children.

Rivera still believed she could deliver a higher value to all her stakeholders, including consumers and shareholders, by remaining independent. She believed that by staying independent, the mission of the company, her raison d’être, would be better protected. While strategy, marketing, operations, and finance were very important, she viewed the mission as the core of the company—the gravitational center of its operations—and wanted to preserve it whichever path she chose.

She took a deep breath and returned to a half-written e-mail, giving feedback to her chief financial officer on the packet they were preparing for an upcoming board meeting. Exciting news would be on the table for discussion, including new accounts, market research results, and a progress report on the build-out of their new, state-of-the-art production facility.

But two topics being raised to the board were even more timely and strategic after Rivera’s discussion with Chen. One was the interest of early investors in selling their stock. In light of Chen’s offer, Rivera now wondered if the early investors should be encouraged to wait for an exit, or if she should bring in new investors. She had already worked with an investment bank to create a private market for Organics Now stock, allowing new investors to come in as others sold their shares. This process introduced new, mission-aligned investors into the company, and made bringing in new investors seem less daunting.

The second timely topic the board would discuss was a key strategic initiative: a grab-and-go line of products at a price point that would make Organics Now accessible to nearly all shoppers, not just the more affluent natural foods shopper. Organics Now could truly democratize access to healthier, more convenient foods. This initiative would require significant capital, and could present more risk than her current investor base was prepared to take.

Her investor based included two angel investors who had a more conservative bent and were pushing for a more “stay the course” approach. Later investors included a wealthy family and a growth equity fund, both of which were mission-driven and took a more pro-growth stance.

There was division among the board on the best approach. She hoped this board meeting would provide more clarity and consensus, but she was also realistic about the fact that her board members had different agendas. She hadn’t fully decided which capital strategy would best support her vision, and she wondered if Chen’s company would be even better suited to launch the new line.

As she typed out her feedback to the CFO, she received a call from her head of marketing, who needed her thoughts on an ad layout. The question of her capital strategy and overall next steps for Organics Now would have to wait.



Michael Whelchel is the Co-founder of Big Path Capital, a leading investing bank assisting values-led founders. He believes impact investing is a superior way to use capital.

Rivera is on the mark to be protective of Organics Now’s core mission. In working with values-led founders and CEOs in finding liquidity and exit options, we see mission playing a vital role in purpose-driven companies. In many cases, like Rivera’s, the mission of the company is the founder’s raison d’être, the grounding and deep conviction at the core of the company, its gravitational center keeping it in its successful orbit.

Rivera should re-frame her decision around mission-alignment versus framing it as a strategic versus non-strategic capital source. These financial transactions, such as what Chen is proposing, represent key inflection points in a company’s life that can have permanent effects on the future of a company. Thus, mission-alignment should be her first framing principle.

Once framed in this context, there are a growing number of options within the genre of mission-aligned capital:

CREATE A PRIVATE MARKET FOR STOCK. Rivera could continue the strategy she has already utlitized. That is, bring in new mission-aligned investors for growth capital and take out some of her early investors that may be getting anxious for liquidity. This has been a good strategy for a number of our clients. Creating a pool of mission-aligned shareholders can help address the need for liquidity and growth capital, while bringing in new investors committed to the company’s long-term mission.

IMPACT FUNDS. Rivera could consider taking an investment from or selling to a growth equity or private equity fund that is looking for investments that have both financial, environmental and social returns. This could be an attractive option, giving Rivera the growth captial needed to scale as well as the comfort that her mission would be supported by the new investors.

PERMANENT CAPITAL. Rivera could also explore an investment or purchase by groups that have a buy and hold approach to their investing. This could be a wealthy family looking to buy, hold and grow businesses or from a holding company, much like a Berkshire Hathaway model. Unlike an impact fund option, these groups are able to continue an investment with no exit horizon, which provides more stability for the company’s mission.

ENLIGHTENED STRATEGIC. Sometimes selling to a strategic buyer, like the global consumer goods company Rivera is talking to, can be portrayed as selling out. While high profile cases like White Wave demonstrate how a large corporation can destroy a mission-based company, there are a growing number of positive examples where the original mission of the company is scaled well beyond what the founder could have imagined. Some of these positive examples are Honest Teas and Coke, Plum Organics and Campbell’s, and Vermont Creamery and Land O’Lakes. In each of these successful examples, the corporation was looking at the purchase as a way to help them change their strategic direction, and the corporation gave the company a great deal of independence to retain its culture and authenticity.

Ultimately, Rivera should first look to the intentionality of the capital to inform her decision. With an intentional approach to preserving mission, she can shape her company’s destiny and the larger impact she desires to see in the world.


Seth Goldman is the Co-founder and Teaeo Emeritus of Honest Tea, the nation’s top-selling organic bottled tea. Seth sold the company to coca-cola in 2011.

Rivera’s situation brings back a lot of memories from a similar situation I was in at Honest Tea. Before Coca-Cola approached us, we had been approached by Nestle, who had proposed an outright acquisition. Although we didn’t move forward with Nestle, that discussion helped us identify how to stay true to our mission.

When Coke called to explore our interest in selling to them, I said, “This is not a negotiating strategy, but we can’t sell this brand yet. It’s too new, and still in a formative stage, with lots of growth ahead. The mission is on its way to realizing itself, but there’s a lot more work to do.”

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This was the first deal Coca-Cola had ever done where they didn’t buy the company 100-percent outright. Their culture had always dictated that they buy the entire brand, and then “realize synergies,” which usually meant taking over and cutting out the founders. We made it a staged acquisition because we wanted each side to understand how the other works and develop a sense of trust. Coca-Cola initially bought 40 percent of Honest Tea in 2008. For three years, we continued to operate as an independent enterprise, with Coke as a minority investor. When Coke had the chance to buy the rest of the company in 2011, we had proven to each other that we could continue to aggressively grow the business without compromising the mission.

When Coke invested in 2008, we were at $23 million in revenue. By the time they bought the company, we had hit $72 million—we’d grown threefold in three years. They said, “Why should we change anything if it’s working?” Today we are ten times larger than we were then. When Coke first invested, we were in about 15,000 accounts. Today, that number is 140,000, including national chains such as Wendy’s, McDonalds and Subway. Equally important, our mission is far more rigorous and impactful. In 2008, less than 40 percent of our tea drinks were Fair Trade certified. Today, all of our teas are Fair Trade certified, and all of our sugar is as well, generating more than $1.5 million in Fair Trade premiums. And, we offer more zero-calorie drinks than ever before.

Still, selling to a strategic isn’t for everyone. It depends on the business. For us, as a beverage business, accessing customers by securing space on beverage trucks is essential. There just aren’t independent drink companies of scale other than Red Bull. They have their own trucks. So, for us, it was the best option. Ultimately, it depends on the industry, the product, and the distribution model.

Lastly, I would encourage Rivera to make sure her mission is embedded in her brand, and that the core attributes are verified by independent third-parties. Honest Tea’s mission was always about our product. It was low-calorie; it still is. It was organic; it still is. It was fair trade; it still is.

Once an entrepreneurial enterprise aligns with a large corporation, the automatic goodwill disappears—so it’s critical to have brand attributes that can’t be compromised. If you build a brand with the mission as the cornerstone of the brand’s equity, then the only way to compromise that is to take those values away. It’s not that we just say, “We’re environmentally friendly.” That’s a mushy term that can mean different things. The customer will know right away if you don’t stand behind your claims. We have to stand behind our authenticity every day.


Blair Kellison is CEO of Traditional Medicinals, which believes it can create more value for all stakeholders remaining independent. Reinvention of the standard business model excites him.

Having worked at the world’s largest food company (Nestle) and the world’s smallest food company (my own) and several places in between, I am in a unique position to evaluate such situations.

In today’s CPG food environment, it is a fallacy that bigger companies are better than smaller companies. The vast majority of growth in the CPG food sector stems from companies focused on the natural/organic/specialty segment of the industry. Two macro trends are driving growth at these companies. The first is a flight to quality across all food categories at all income levels. The second is consumer demand for transparency from food producers.

Big CPG has yet to show it is capable of executing against either of these two macro trends. To date, their only avenue to capitalize on these trends has been to purchase smaller, mission-driven companies whose business models inherently address these two macro trends. Big CPG has not shown an ability to leverage acquisitions to capitalize on these macro trends post acquisition—they just can’t seem to leave them alone. In an effort to create cost savings synergies, they diminish product quality and consolidate personnel and activities with those existing in their organization. In the end, this destroys the essence and culture of the acquired company and results in a loss of consumer confidence and market share post-acquisition. Big CPG business models are based on expanding distribution and reducing product and personnel costs. It’s all they’ve ever done; it’s all they know.

The time for natural/organic/specialty foods to rise above their much larger, mundane, mainstream competitors has arrived. Smaller, mission-driven companies have products and business models that meet the needs of today’s consumers. Their products are aligned with long term consumer trends that support long term growth. They now have access to large amounts of investment capital. They now have access to selling their products in traditional retail outlets. They are better positioned than large CPG to attract the most talented workers. As private companies, they can focus on long term strategic initiatives instead of quarterly earnings. All of this results in these companies effectively competing with their larger counterparts while also producing above-market returns for their investors.

Organics Now needs alignment of their strategy with their board and investors. Companies are either gaining or losing marketing share – they are either growing or shrinking – standing still is not an option as a CPG company. Organic Now’s investors that have a short-term investment horizon should be replaced with long term horizon investors.

Rivera’s financial needs over the long term will be better served remaining an independent entity, and she will create more value for herself remaining independent. She must ask herself – What is the value of her values?

It’s an easy decision in my opinion: remain independent, earn above-market returns, and stay true to your mission that is aligned with your values.


Diana Propper De Callejon is a Managing Director at Cranemere, a holding company that operates with a long-term view and indefinite ownership horizon.

Rivera faces the challenge of identifying a partner to help scale the business, extend its mission and preserve her legacy.

Her alternatives are typical of those available to the wave of high growth, purpose-led businesses that focus on creating value for all stakeholders – not only their shareholders. They also come with significant limitations and trade-offs.

Continuing with a revolving door of small investors with varied interests and time horizons is not suited to accessing the expertise and stability needed to achieve Organics Now’s potential. Selling to a strategic has clear attractions: a high price today, national distribution, additional resources, sourcing scale and a pathway to the growth that one dreams of as an entrepreneur. But these attractions can come at a high cost as the business is subsumed by layers of corporate bureaucracy, putting product innovation and speed to market at risk. Rivera’s loyal customers might find it hard to remain trusting of her brand as they perceive the products of the acquiring company to conflict with Organics Now’s mission.

Rivera may opt for institutional capital from growth-focused and impact-oriented private equity funds. While this offers access to expertise and networks, it may only defer the misalignment of interests between investors and founders. Usually within 3–5 years, PE funds exit—not because it is right for the business, but because they need to return capital to their investors. At that point they look to maximize return—not the future value and mission of the business. And founders like Rivera are left with little control.

What Rivera needs is a values-aligned, value-add, long-term capital partner that enables her to stay private and independent and preserve the company’s vision, while providing an ongoing source of liquidity and growth capital when required.

The Cranemere Group, where I work, was founded to meet Rivera’s needs. Our distinct approach is to partner with founders to grow businesses and build companies of enduring value. As a holding company with permanent capital, we have no view to exit the companies we back.

Without the artificial time horizon to sell of a PE firm, the costs and distraction of raising capital or selling the business are avoided, freeing Rivera to focus solely on building the business, culture and mission. The long-term perspective and stability that permanent capital brings will also be crucial to Rivera during the inevitable setbacks and business cycles. Investments that have long payoff timelines make sense.

A holding company with a strong balance sheet can provide liquidity to Rivera, her team and shareholders at different points over time. This provides wealth diversification along the way but allows them to capture significantly more value by holding onto their ownership for longer. Relative to a single large sum today in selling to a strategic, this approach often delivers a larger total return by allowing the value of their stake to grow as the business scales.

Though the traditional options have served us well, a new era is upon us where many purpose-led companies like Rivera’s need alternatives that better align with founders’ interests, values, and vision. At Cranemere, we see our role as driving the innovation in financial models that allows entrepreneurs like Rivera to achieve the impact they wish to make in the world.


Tripp Baird is the Founder and Managing Partner of the Builders Fund, an impact private equity fund investing in purpose-driven businesses. Passionate about capital and conscious business.

What an exciting moment for Rivera and Organics Now: she faces many options, all driven by a well-positioned business with the potential to transform a largely broken food system. I’ve stood in Rivera’s shoes as the CEO of a growing business. I’ve spent years advising founders and teams on how to navigate corporate development strategy, and I now represent one of the options laid out to Rivera: I’m a mission-driven fund manager seeking entrepreneurs that share our vision of a more human-centered, systemically responsible approach to business. I can relate.

The truth is that no cookie cutter answer exists to Rivera’s conundrum. Every company is different, colored by competing founder objectives, various stakeholders, many capital partner and liquidity alternatives, and different access to aligned capital. What is fundamentally true in every situation, Rivera’s included, is that honest, direct communication between stakeholders is key to laying the groundwork of an aligned growth plan and supportive capital strategy.

It may be that independence best serves the mission and objectives of the company. Therefore, a values-aligned investor that is additive to operations, while providing needed liquidity to older investors, would be a perfect fit. But in that case, finding a truly values-aligned investor can be a challenge. Rivera should take the time to get to know the decision-makers, share her objectives clearly and listen to ensure she understands Chen’s business model, time horizon, and approach to investing. Is it aligned?

Alternatively, the opportunity to fundamentally change the food system from inside a larger organization may represent a calling for Rivera (after all, true change requires scale, and while there are many examples of poor “marriages,” success stories exist, too). If so, she needs to feel that the strategic partner is truly committed to protecting the culture, brand tenets, and mission-driven approach Organics Now has spent years building. She needs to confidently determine whether they are authentically committed to change, or if Chen’s interest is just commercial. Furthermore, it’s important to consider the details of Rivera’s life, personal objectives, other stakeholders, and capital options.

In my view, Rivera needs to truly understand the people involved and see where real alignment of values and shared vision can manifest. None of the options is inherently bad or good; it really depends on the quality of the partnership and the ability of the principals involved to co-create an aligned vision for the future—and execute on it.

Rivera’s decision should also be fundamentally driven by her and her organization’s purpose and what best allows that purpose to flourish. Money is essentially a commodity, but it comes packaged in different ways. As the leader of a mission driven company, Rivera should focus on developing a clearer understanding of the available alternatives to make a fully informed choice from the heart that not only honors her personal objectives but also honors the needs of the organization, but of all its stakeholders.

By Michael Whelchel, Big Path Capital & Lisa Cox, Sorenson Impact Center

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