Valuing a Brewery

Cheers to anyone who owns a brewery, wants to own a brewery or just wants to know how much a brewery is worth! The craft brewery market has been growing and continues to expand. As the industry continues to evolve, existing breweries will become “of age” or leave the market, and new breweries will continue to enter the market. Whether it is a new brewery or an established brewery, the brewery’s value can and will be of interest to the current owners, potential owners or other interested parties.

  • What are the assets worth? – One approach to valuing a brewery is the asset approach, or the value of the assets less the liabilities. The nature of the assets greatly depends upon the business model of the brewery. Often times, the brewery will start out as a bar or restaurant that serves its own beer. The assets in this case will resemble a bar or restaurant with some brewing equipment. As the market for the beer grows, the brewery will develop distribution either internally or through outsourcing. As the brewery becomes a true “brewer,” the assets will include more of the manufacturing equipment and can have more operating assets, such as inventory, accounts receivable and accounts payable. In addition to the tangible assets, the brewery can have intangible assets, such as trade names and trademarks, recipes and customer relationships. For the startup, the tangible assets will potentially be of much greater importance than for larger, more established breweries. Typically, the value of the net assets sets a minimum value for the owner of the overall brewery, but may be of little importance to a non-controlling owner with little, if any, ability to force liquidation or otherwise benefit from the value of the assets. In short, understanding the value of the assets and liabilities is an important part of estimating the value of a brewery; however, the value of the net assets may not be a true indication of the value of the business.

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Author:
Brian Steen, Principal | DHG Forensics & Valuation336.714.1624 | brian.steen@dhg.com