Benefits and Drawbacks: Mondavi Winery Becoming a Public Company

1. What are the main benefits and drawbacks to the Mondavi Winery of becoming a public company?
a. Benefits:
i. Mondavi was able to raise approximately $50 million of additional capital for replanting and expansion. ii. Thought that it may be one of the best ways to capitalize the industry due to the pulling back by the banks as the winery industry has overproduction and ruthless price cutting causing a lack of credit for the industry
b. Drawbacks:
i. At first thought it was the right time to go public, but.. got hit by a dramatic final word (by Forbes) – competition; Mondavi would continue to face downward pressure on its price, decrease in supply of grapes and interest expenses from necessary near term borrowing

2. What types of investors are most likely to be interested in the company? How could you target those investors?

Investors tutored in the Peter Lynch school of investing?
Preferred stocks not publicly traded

3. How would you recommend Robert Mondavi respond to the market’s current assessment of the company? In other words, how could the company combat the current fall in the share price?