There are many reasons for why a vineyard or winery may require an appraisal. Ten of the most common include the following:
| Financing | In purchasing a winery and/or vineyard it is often required that financing be obtained to allow for the purchase to go forward. It is important to work with either banks, mortgage brokers, or private lenders knowledgeable in the industry to obtain financing for a vineyard or winery purchase, re-finance or expansion. |
| Possible Purchase | Individuals, partnerships or corporations often look to expand operations and may be well-advised to seek-out third party opinions of value to ascertain a reasonable purchase price figure. This is also true for so-called hobby vineyards--those groups that may include wealthy individuals seeking out a more interesting and less-lethargic form of retirement. |
| Possible Sale | The inevitable up and down trends of the industry means that certain groups may, at some point, need to sell the vineyard. In order to achieve a reasonable price, it is very important to fully understand the comparable sales in a given market; and to know the projected marketing time required to achieve a fair price. |
| Ad Valorem Tax (Real Estate Tax Appeal) | Depending on where your vineyard is located, you may or may not have your vineyard assessed for real estate property taxes on a annual basis. However, even in states such as California, that normally require a re-assessment at the time of sale, it is important to ensure that the vineyard is assessed only for real property items. When a sale occurs, a transfer of additional assets beyond merely real estate may have transpired. Also, depending on the motives of the buyer (such as an adjoining-owner) an above-market price may have been intentionally paid for their own unique reasons. It is important that a vineyard only be required to pay real estate taxes on the fair market value of the real estate assets. |
| Sale or Purchase of a Partial Interest | Vineyards are often owned by partnerships. Partnerships, by their very definition, create partial interests. Additional expertise is required in the analysis of the market value of a partial interest. Generally, a partial ownership interest is oftentimes worth less than it's pro rata share of the fee simple interest due to factors such as lack of control and lack of marketability. These partial interest discounts have generally been acknowledged by the tax courts, and can be an important estate planning tool. Also, determining the market value of ones' partial interest may be useful in case of divesting that interest. |
| Fresh Start Accounting | For companies emerging from bankruptcy, or those firms that may have purchased a group of assets that included a vineyard, it will generally be required (or at least advisable) to determine the market value of each of the specific assets for book and tax purposes. |
| Allocation of Purchase Price | Similar to the fresh start accounting purpose of an appraisal, allocation of purchase price is often required to be done in detail (especially for publicly-traded firms). FASB has detailed regulations pertaining to this, and moreover, not setting up the correct accounts at the onset could compromise the integrity of your company's financial reporting. |
| Annual Reports or Partnership Reports | If you are on the Board of Directors of a Vineyard or Winery operation that has existed for many years, would it not be worthwhile to determine the value of the vineyard or winery? The industry has seen a great deal of consolidation in recent years, and having no idea what your assets are worth, keeps you from understanding whether you a candidate acquiror or acquireee in the marketplace. An annual statement of net worth is a worthwhile investment for most companies. |
| Estate Planning | Oftentimes vineyards may be owned by families. It may be important to determine the value of the family assets for the purposes of estate planning. This includes such things as determining the value of the vineyard assets as of the time of death of a key interest holder in the family partnership, as well as handling the capital gains and inheritance issues that may arise. An appraisal can greatly assist in the tax planning process and help to avoid tax problems (and potential family disputes associated therewith) in advance. |
| Litigation | Occasionally litigation issues can affect a vineyard or winery owner. The purpose for the litigation may involve inheritance issues; condemnations; right or way; environmental regulations; employment law; or a great many other reasons. It may be advisable to have an appraisal done to ascertain the value of the assets as it pertains to the litigation. |