Wine Industry Executive Profile: Mario Zepponi

<p><b>Mario Zepponi</b>, The Zepponi Group; 200 Fourth St., Ste. 300, Santa</p><p>Rosa 95401; 707-542-7500; www.zepponi.com</p><p><b>Caree</b>r: principal, The Zepponi Group, Santa Rosa, 1999–present; attorney,</p><p>Beyers Costin, Santa Rosa, 1994–present; attorney, Broad Schulz, Larson &amp;</p><p>Wineberg, San Francisco, 1988–1994</p><p><b>Education</b>: J.D. and M.B.A., University of Notre Dame Law School, 1988;</p><p>B.A., English and Economics, U.C. Berkeley, 1984</p><p><b>Staff</b>: 3</p><p><b>Industry outlook</b>: Transactions will continue to happen, but they will</p><p>need more time and patience on the part of the winery or grower and the lender.</p><p>A lot of the partnering going on now with minority and majority partners</p><p>will continue to be the trend until we get to more stable economic times.</p><p><b>Favorite wine pioneer</b>: Ron Larson, former partner at Broad Schulz</p><p>Larson &amp; Wineberg and Steefel Levitt &amp; Weiss, and now the vice president</p><p>of corporate affairs and general counsel at Trinchero Family Estates. Not</p><p>one ounce of me aspired to work in the wine industry, but he took me to wine</p><p>events all the time and mentored me.</p><p><b>Age</b>: 47</p><p><b>Residence</b>: Sebastopol</p><p><b>Stress relievers</b>: Hiking in Shasta-Trinity National forest, running</p><p>and soccer</p><p><b>Favorite quote</b>: “If you think you can or you think you can’t, you</p><p>will always be right.” –Henry Ford</p><p>SANTA ROSA – Corporate, real estate, environmental and land-use attorney Mario Zepponi has brokered key ownership changes in the North Coast wine business in recent years, and he is gearing up to meet a growing need for legal know-how in investment deals.</p><p>Mr. Zepponi has been involved with a number of high-profile wine industry mergers, sales and acquisitions of real estate and other assets. Notable deals in the past four years include representing Bill Foley in the acquisition of the Napa Valley luxury-tier cabernet sauvignon brand Merus, the shareholders of Murphy-Goode Estate Winery in the sale to Jackson Family Wines, the De Loach family in the sale of Russian River Valley wineries to Sonoma Wine Co. and to Joseph Anderson’s investment group, and the Coleman family in the sale of Adler Fels Winery to the Adams Wine Group.</p><p>As an attorney with Santa Rosa law firm Beyers Costin, Mr. Zepponi has about 80 percent of his practice involved directly with the wine business in Sonoma and Napa counties, working out grape and wine purchase and processing agreements plus vineyard transactions and development. The remainder of his work is for the hospitality industry, mainly for smaller venues intimately involved with wine country tourism.</p><p>His 20-year career has included representing telecommunications, high-tech and retail companies in lease deals.</p><p>“I made the decision to focus on investment brokering last year,” he said. “I couldn’t give my best to lawyering and to investment brokering.”</p><p>By ramping up activity through The Zepponi Group, he has been focusing on small to mid-sized wineries and growers that need a broker who understands legal intricacies and bringing in needed appraisers, valuators, accountants and other professionals. He has about 10 active consulting projects and several one-off clients who have a specific acquisition target in mind.</p><p>“It’s a great time to be brand-building,” Mr. Zepponi said. He’s found a lot of demand recently in helping growers or vintners figure out whether it’s the best time or option to buy or sell. </p><p>“There are good brands out there, and it may not be the ideal time to sell,” Mr. Zepponi said. “It may need two or three years to get to an optimum exit point.”</p><p>But wineries are feeling pressure not only from slow to stagnant sales for higher-priced wines in certain markets but also from capital-craving lenders. Quality brands and those with strong cash flow are in demand among a handful of buyers on the hunt in the North Coast.</p><p>“I’ve never before dealt with so many banks behind the scenes on lines of credit and operating capital for wineries looking to sell or joint-venture,” Mr. Zepponi said about recent direct and indirect negotiations with banks. “It goes well beyond workouts.”</p><p>He’s found that many lenders, particularly those with long involvement in the industry, are not eager to take back assets on problem loans and want to continue banking relationships, according to Mr. Zepponi. Those ties are getting strained because of economic conditions, but lenders largely aren’t looking to jack up rates and fees.</p><p>For growers, he is telling his clients to try to view their vineyards like multi-tenant commercial buildings to spread the risk of the loss of any one grape contract. Though hard to do, particularly on small properties, it can be part of a marketing plan that includes a well-crafted vineyard story and, hopefully, a notable buyer willing to create a vineyard-designate label.</p><p>Brokering deals rather than immersing himself in the legal mechanics has been Mr. Zepponi’s goal from the beginning. He had a double major in college to garner skills for law and graduate business school. </p><p>A Bay Area native, he returned after law school and served as clerk at the San Francisco law firm Broad Schulz Larson & Wineberg the summer before joining the firm’s business law department, which handled matters for the Glen Ellen brand before the Benzigers sold it to Hublein, as well as Christian Brothers and Sutter Home. That’s where he met wine law pioneer Ron Larson, now corporate counsel for Trinchero Family Estates.</p><p>That mentorship helped him see how the wine business can be more interesting for an investment broker than the high-tech industry.</p><p>“When I think about general business deals, it seems to be more about dollars and cents,” he said. “In the wine industry the businesses tend to be more family-owned, more wrapped in the personality of what they’re producing.”</p><p>That connection can also complicate client discussions that come down to economics when there has been so much attention over several years in the artistry of the product, he added.</p>