–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, Irrigation, 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
– HOMESITES (Vineyard 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?
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David Hahn, CVA, ASA, MAFF, CCIM, CM&AA, MBA
CVA - Certified Business Valuation Analyst
ASA - Accredited Senior Appraiser
CM&AA - Certified Merger & Acquisition Advisor
CCIM - Certified Commercial Investment Member
MAFF - Master Analyst in Financial Forensics
CA State Certified RE Appraiser, License #AG009828
CA State Licensed RE Broker, License #00902122
Business Valuation, Commercial Real Estate Appraisal.
Alpha Appraisal Consulting Group (AACG) serves in the area of Valuations, Business Valuation, 409A Valuation, Company Valuation, M&A Valuation, Financial Valuation, Commercial Appraisal, Commercial Real Estate Appraisal, Cost Segregation, Renewable Energy Valuation, Data Center Enterprise Valuation, HOA/Condo Reserve Study, Capital Assets Valuation, Patent Valuation, IP Valuation, Startup Capital Valuation, Bankruptcy Valuation, Estate/Trust Tax Valuation, Cannabis Property & Business Valuation, and Fairness Opinion throughout all States of USA.
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