Project Description

This edition will be a resource of tremendous value. The book penetrates the wine industry’s mystique and empowers you by revealing, in layman’s terms the techniques for valuing these businesses and their assets. No other book on the market covers all of these issues in one source. It is packed with spreadsheets, examples, forms and checklists which really work. The knowledge you will gain from this book is powerful. The book explains important terms and concepts clearly. 

You will also discover:

> Why a Lease is the Most Important Deal Breaker for Selling a Business

> The Nuances of a Vineyard and Winery Operator’s Revenue Streams and Expenses

> How to Analyze Operator’s Financial Statements

> Compare a Winery Operator’s Ratios to the Industry     

> Winery Valuation Rules of Thumb  

 > Analyzing Cash Flow for Operators 

> How to Crank Out Discounted Cash Flows For a Business

> Valuing the Real Estate of Wineries and the Nuances Which can Drastically Affect Value

> What Changes are Likely to Happen in the Next Five to Eight Years

> Business Acquisition Rates of Return

> Real Estate Cap Rates for Various Winery Operations 

> Typical Equipment for Various Winery Operations

> How the Equipment can Make or Break an Operation

> Equipment Value in Use versus Orderly Liquidation Values

> Calculating Fair Market Rental Rate 

> Purchase Price Allocations for Asset Sales

> Vineyard and Winery Industry Resources 

This book is the only one of its kind with an in depth overview of the valuation of vineyards and wineries 

Chapter 1 provides a comprehensive overview of the industry and the changes which are taking place. This chapter will focus on the history, operations, competitive landscape, risks, trends, and regulatory environment of the industry.

Chapter 2 is on Financial Statements & Operations In this chapter, the reader is provided a primer on basic financial statement ratio analysis and an overview of adjustments for extraordinary and nonrecurring items. Although these adjustments are not as critical for larger businesses, they are crucial for understanding and valuing closely held businesses. Finally, the addendum presents an invaluable Checklist of Important Items for Winery Valuations on page 68.

Chapter 3 is a Summary of Business Valuation Approaches. This chapter presents a summary of the various approaches to valuing a business. More importantly, it presents an overview of which valuation technique is most useful, when comparing the values during a reconciliation.

Chapter 4 covers the Winery Business Valuation. This is one of the most basic approaches to valuing a business is by looking at the balance sheet. It is challenging to accurately adjust the balance sheet s assets and liabilities to market values. This section focuses on the adjustments and nuances of making each adjustment. The market approach is another method used for establishing the value of a winery. The market approach is used frequently because it is the easiest technique to understand. Most people understand multiples from the stock market as well as rules of thumb. This chapter also presents the advantages, drawbacks, and dangers of using rules of thumb. The income approach incorporates financial information into a discounted cash flow. A discounted cash flow takes debt-free cash flows expected in the future and discounts them back to present value using an appropriate discount rate, typically known as WACC (weighted average cost of capital).

Chapter 5 addresses the Asset Valuation for Wineries (Real Estate). Real estate may sometimes constitute the largest component within the fixed asset category on a balance sheet. This chapter gives a critical primer in what to look for when accounting for the real estate asset as part of a vineyard business acquisition or valuation.

Chapter 6 covers Winery Asset Valuation (Equipment). Every business is sold with equipment. However, knowing how much the machinery and equipment are worth will assist the purchaser in determining the amount of goodwill that a buyer would pay for as part of the overall purchase price. These assets are different from real estate and intangibles because their values can differ depending upon the specific circumstances under which they are being sold, e.g., liquidation value, going concern value. Sometimes the installation costs can be higher than the liquidation value. After understanding this chapter, you will be able to notice how a balance sheet can change radically based upon the definition of value as well as calculate the differences in equipment values. The appendix presents all of the major references used with their addresses, websites where available, telephone numbers, and specific definitions within a glossary for different valuations (business, real estate, and machinery and equipment).