Valuation for the purchase of breweries in China

Analyses reduced risk when purchasing breweries

The acquisition of breweries requires analysis of the brewery's condition and the anticipated need for investment. NIRAS helped on a major project in China.

Minimised risk and a clear overview of the need for potential investment. These were clearly the overall benefits, when NIRAS helped a customer with the valuation of a number of breweries in China in connection with the acquisition of two local companies.

The customer needed a clear, unbiased assessment of the condition of 31 breweries.

As part of the preparations, the customer needed a clear, unbiased assessment of the condition of 31 breweries throughout the country and the need for potential investment in new equipment and buildings.

Experts from NIRAS provided the technical overview prior to any decisions about investment.

This involved, for example, a Fair Market Value assessment: a set of internationally recognised valuation principles.

In a Fair Market Value assessment, NIRAS looks, for example, at the breweries' equipment, the need for maintenance and their remaining service life. Then they look at the cost of new purchases and thereby arrive at a level of depreciation allowance.

For example, the analyses in the model provide an estimate for renovations, a 10-year plan for investments and calculations of the breweries' capacity, and identify potential bottlenecks in production.

Another important aspect of the model is evaluating the geographical location of the breweries. For example, if a brewery is located in an area that is prone to frequent floods or earthquakes, this will affect the valuation by a given factor. The same applies to the infrastructure of the area and access to the market.

What the customer gets from the analyses is a clear overview before making a decision about the acquisition. In the work, NIRAS's extensive experience of the brewing industry and in-depth knowledge of brewing equipment at a global level guide the customer safely through the process.

NIRAS can also provide experts with international experience of brewery projects throughout the world.