At some point all businesses will be transferred, whether to family, partners, employees or to a third party buyer such as a wealthy lifestyle buyer, a private equity firm or a strategic investor. In order to achieve the winery owner’s goals and objectives and achieve maximum wealth at that time, exit planning is crucial.
Unique Challenges for Winery Owners
Winery and Vineyard businesses are unique. They differ from other privately held or family owned businesses in two ways.
First, the structure of the business is different. Oftentimes, there are significant holdings in land and property, which represent specific challenges, when preparing a change of ownership.
Second, the wine business and its operations are relatively complex compared to other types of businesses that are similar in size. Wineries represent one or several distinct businesses that may be more or less integrated depending on the type of operation. A winery may include several or all of the following activities:
- Product Development and Marketing
- Manufacturing – Discrete and Process Manufacturing (Bottling and Wine Making)
- Distribution – Wholesale and/or Retail
- Entertainment – the "Wine Tasting Experience" and Special Events
Due to the increase in real estate prices across California over the last several years, winery buyers do not always recognize the value of each of the components of value, when bidding for a winery. They will try and combine the value of the business with the value of the real estate and negotiate a price for the entire operation embedded in the price of the real estate, thus downplaying the value of the business.
Solution for Winery Owners
By developing an exit strategy well before the actual exit it is possible to maximize the selling price and realize the true value of all the components including the business. If the value of the business is not yet at the desired level, a value enhancement plan may become part of the exit strategy.
Our ultimate goal is to maximize client wealth through a successful transaction. How do we do that? We work closely with our clients and their professional advisors to develop and implement exit strategies that enhance business value one to three years before a transaction. Once the business is ready to go to market we develop and execute a customized marketing plan aimed at locating multiple prospective buyers and negotiate a successful transaction.
If you like to learn more about our exit planning capabilities or simply want to speak about the possible sale of your winery or vineyard please contact us for a confidential, no obligation conversation about your current situation.
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