So how much did reality TV queen Bethenny Frankel sell her Skinnygirl cocktails to Beam Global for last year? Hollywood’s favorite new parlor game continues.
Last summer we estimated the deal was worth $100 million in a cover story. Others pegged it still higher. The latest to enter the fray is a Huffpo blogger, saying she got just $8.1 million.
But Rob “Naughty But Nice” Shuter’s math—based, it seems, on a faulty reading of Beam’s financials—appears to be a bit off.
Read the form 10-Q closely and you’ll find the $8.1 million is just the value of the goodwill attributed to the brand. “The $8.1 million was just the amount of intangible assets purchased in the Skinnygirl transaction, essentially the amount Beam paid for the Skinnygirl brand rights—not the total purchase price,” says Morningstar analyst R.J. Hottovy, who follows the company and worked with us on our original reporting.
In Shuter’s defense, figuring out celebrity finances isn’t for everyone, and the company is completely opaque about the deal. The actual price they paid for Skinnygirl is nowhere to be found in the 10-Q. Frankel won’t publicly say what it is, citing a confidentially agreement, nor will Beam, arguing that it’s done all it needs to do under generally accepted accounting rules. “We will continue to disclose accounting data as required to be included in financial filings,” says Beam Global spokeswoman Paula Erickson, “but do not expect that a black-and-white lump sum ‘purchase price’ figure will be made available. Suffice to say, this was not an $8.1 million acquisition.”
But even if the company won’t say what they paid, there are clues scattered throughout the document, and they bolster Forbes initial valuation, which was based on discussions with sources close to Frankel and estimates by beverage industry insiders based on their analysis of similar deals.
On page 5 of the 10-Q, for instance, Beam lists $39 million for acquisitions in the second quarter of 2011. “The only deal they announced over that period was Skinnygirl,” says Hottovy. “This means [Beam] paid at least that much for Skinnygirl [during that period].” He adds that there may be additional elements to the deal not accounted for or visible in company filings, including stock options that could bring Frankel additional long-term returns.
In addition to up-front payments for the acquisition of Skinnygirl, Frankel had told Forbes that she’d get what she called “on-going back end”—payments based on how well Skinnygirl’s cocktails sold after Beam took control. These kind of earn-outs are called “contingent consideration” in accountant-speak and are common in deals where the acquirer wants to incentivize the seller to stick around and help keep the business on track.
So how much is this part of the deal worth? Again, Beam’s SEC filing isn’t clear: “In future periods the company may be required to record contingent consideration in an amount not in excess of approximately $25 million,” according to the 10-Q.
Erickson said the $25 million mentioned in the 10-Q would be for “certain case volume thresholds following the acquisition” in other words, how much Skinnygirl booze they sold. And, according to Erickson, sales of Skinnygirl have exceeded expectations for 2011 and that threshold will be met this year.
That would bring the value of the deal to at least $64 million in this year alone, without accounting for any further payments or other compensation for Frankel. And Frankel will definitely be receiving more money down the road, says Erickson, though she’s coy about how much. “The acquisition was structured with various potential payout levels based on sales of Skinnygirl products,” she says.
Reached by phone late last night, Frankel once again refused to tell us the number. So what about $8.1 million? She laughed. "Come on. That it could be the fastest growing booze brand on the market and have sold for that little is just preposterous,” she says. “I'm going to be paying a hell of a lot more than $8.1 million in taxes."
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