As a brewery owner, you have your hands full brewing exceptional beer, making payroll, dealing with regulators, evaluating the hops/malt crop, fixing the canning line, scheduling taproom activities, cleaning tanks, filling out TTB forms ... the list is practically endless. With so many issues vying for attention, buying out the interests of a partner who suddenly died, buying out a spouse’s interest in a divorce, dealing with investors who want an exit, or fighting a shareholder oppression suit don’t factor into what has to be done today.
In a rare moment of breathing space, you may have thought of transitioning brewery ownership via an ESOP (employee stock ownership plan) or by gifting shares to your children (or a foundation). You may want to compensate key managers with company stock, stock options, or incentive units. Maybe you need to raise capital through additional debt or a new round of equity. Finally, you may want to be proactive and know what your brewery is worth in case a private equity group shows up in the parking lot with a term sheet.
Every one of these situations requires a determination of the value of your brewery. But what exactly does a valuation look like? This article aims to answer that question using a case-study valuation of an actual operating brewery in the United States, which we’ll call SmallBrewCo.