–Financing, lender’s collateral
–Financial Reporting (FASB & International Standards)
–Sale or Purchase
–Disputes involving Value
•Dissenting Shareholders, Family Disputes, Divorces, Partnership Dissolutions
•Estate Planning, Minority Discounts
•Allocations for Income Tax Depreciation
•Property Tax Assessment Appeals
•Capital Gains Calculations
• Consumer spending and tourism
• Nonfinancial services
• Real Estate and Construction
• Banking and Finance
• Agriculture and Natural Resources
• Employment (Federal and California)
• Per capita alcohol consumption on the increase
• Demand for both wine is on the increase
• Industry Cycles
• Consumer Preferences
• General Economic Trends
• Global Factors
–Land as Capital Cost (Return on, or opportunity cost of land)
–Area and site specific costs
- Vines, Trellis, Irrigatin, Reservoir, Wells, Pumps, Roads, Fences, Land Improvements
- Facility FF& E (Fixtures, Furnishings, and Equipment)
–Cost of Capital
–Depreciation (Living vs. non-living) –“Mature” vs “Developed”
Sales Comparison Approach:
– Unit of Measure
•Price per Acre
•Price per Ton?
•Price per foot of Cordon ?
– Characteristics Compared
(Venyard Estate consists of Vineyard, Land, and Homesite)
• Most transactions are private; very difficult to get pricing, terms, other stats on private transactions
• Obtain Merger & Acquisition data
• Most commonly used approach for operating companies
- Capitalized Cash Flows
- Discounted Cash Flows
• Invested Capital methodologies and EBITDA multiples
- Can be high depending on the brand value
- 7x to 10x is not unusual
- Can exceed 12x with exclusive integrated estate wineries, when brand and real property assets are included
There are three primary types of wineries:
an integrated winery, a merchant winery, and a hybrid winery.
These types can vary in size and organization structure, and each has its own advantages.
A merchant winery buys all grapes. A hybrid winery owns a vineyard, however buys a variety of grapes to blend or make their labeled-wines per their likings.
Winery valuation as a going-concern business must consider the following pertinent questions:
1. Are the books maintained on a cash or accrual basis?
2. What inventory costing methodology is being used? (Fifo or Lifo)
3. Where does the winery source its grapes?
4. Are winery and vineyards leased from a related party?
5. What are future capital requirements?
6. Is the winery’s forecast reliable?
Copyright © 2017 Alpha Consulting Group, Certified M&A Advisor (CM&AA), Commercial Business Valuation, Cost Segregation Study, Reserve Study - All Rights Reserved. Business Financial Commercial Valuation, Commercial Real Estate Appraisal, Capital Assets Valuation - Washington State Certified General Real Estate Appraiser, David Hahn, WA Designated Real Estate Broker, Company Business Valuation, Fairness Opinion, Solvency Opinion, Estate Tax Valuation, Gift Tax Valuation, ESOP Valuation, Patent Valuation, IP Valuation, - All Rights Reserved. David Hahn, Certified Valuation Analyst (CVA), Certified Commercial Investment Member (CCIM), Master Analyst in Financial Forensics (MAFF), Accredited Senior Appraiser (ASA).