CASE STUDIES

Founders Ousted at Brewpub

A merger goes hopelessly wrong at Penn Brewery.
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The Problem
In our July/August 2010 issue, we told the story of Tom and Mary Beth Pastorius. The Pittsburgh husband and wife were agonizing over whether they should come out of retirement and buy back Penn Brewery, the microbrewery and tavern they had founded in 1986 and sold to a private-equity firm in 2003. After the sale, Tom had stayed on as president, but he left after five years amid conflicts with the new owners. When Penn Brewery was put up for sale in 2009, Tom wanted to make a bid. Mary Beth fought hard against the idea but reluctantly agreed to support her husband—provided he find investors to absorb some of the risk. Tom found three backers—Sandy Cindrich, Linda Nyman, and Corey Little, co-owners of a local medical records business. The group acquired the brewery in December 2009.

What the Experts Said
Al Spinelli, director of operations at Sierra Nevada Brewing, said the time was right to reopen a craft brewery, a growing segment of the beer industry. Jack Trout, president of Trout&Partners, warned there are few successful second acts in business. Lauren Zander, chairman of The Handel Group, said Tom and Mary Beth had healthy dysfunction in their marriage that would be good for their business.

What's Happened Since
Tom and Mary Beth threw themselves into the brewery, and for a while, it was just like old times. But Tom, who owned a 17 percent share and was president and chief executive of the new venture, found himself clashing with his partners over matters such as strategy and compensation. Things came to a head, and last summer, the three investors ousted both Tom and Mary Beth. "I thought these were good partners," Tom says. "It was stupid on my part to give them the majority interest."

In December, the Pastoriuses sued one of the investors, marketing director Linda Nyman, and her husband, Stuart, alleging that Stuart assaulted Tom at the brewery, causing "bodily harm" and "severe emotional distress." Linda Nyman denies the allegations, and Stuart Nyman did not return calls. In a court filing, the Nymans' attorney, Erica Lesko, argued that Tom Pastorius initiated contact with Nyman and "appeared to fall to the floor intentionally."

Despite the problems, Sandy Cindrich, who took over as chief executive, says sales have stayed brisk and that the brewery has experienced no backlash over the founders' ouster.

What's Next
The lawsuit will be heard in the Court of Common Pleas of Allegheny County.

Last updated: Mar 1, 2011




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