Experienced And Knowledgeable With Both The Alcohol beverage Industry And The Law

How do you value a business?

On Behalf of | Feb 4, 2025 | Investigation

Not everyone involved in the beverage industry wants to continue running their business forever. Sometimes, a person decides to sell for reasons such as ill-health, financial incentives or the need for a new challenge. Whether you are looking to sell or looking to buy, it’s crucial to get an accurate valuation of the business.

Here are three ways you can go about this:

1. Look at the market

Looking at what similar businesses have sold for, or are on offer for, is one method. You’d need to make allowances for the differences between them and yours, such as one being slightly larger, or one being in a worse location, but it can give a general idea of the current situation.

2. Look at the business’s assets

What assets does a business have and what debts does it have? For example, a small brewery might have $1 million worth of equipment, $100,000 of stock and another $100.000 of ingredients giving an asset value of $1.2 million. From this, you can deduct the $400,000 in outstanding loans and say that the business is currently worth $800,000.

3. Look at the income

This method is not so much about the current state of play, but about what income the business can generate in the future. How much is the seller going to give up by selling it and how much does the buyer stand to make by taking over and operating it? There are several ways of coming up with an estimation and needless to say there can be a lot of debate and uncertainty about the projections.

Whether you wish to sell or buy, there is much at stake and determining an appropriate value is just one of the matters you may need help to understand.

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The foregoing was prepared as general information. It is not meant to provide legal advice granting any specific matter and should not be acted upon without professional counsel. If you have questions or require additional information regarding these or other related matters, please contact Malkin Law, P.A. This material may be considered attorney advertising under certain rules of professional conduct.