How to Sell Your Bar or Liquor Store
Perhaps you have had a long run at it and are ready to be on the other side of the bar for a change. Maybe you recently purchased and decided the industry isn’t right for you. Regardless of your reason, chances are you are sitting on some equity and want to ensure that when you do sell, you get the highest price possible for your business. I have worked with dozens of business owners just like you sell their licensed beverage business and believe it or not, many of the questions they had are the questions you will have too.
The goal of a business broker like myself is to get the best price for your business by marketing to thousands of individuals looking to buy a business like yours as well as educate you and assist you with the transaction of selling your business.
The Best Price For Your Business
You have worked hard. Long nights dealing with patrons, ordering inventory, working with employees, we understand. You deserve to get the best price for your business. Below are a few tips that you can do now, to help ensure that happens:
Have clear, transparent financial records. Automated systems like Quickbooks, Simple-Order, Jolt, and more help the transparency with records. If you don’t use software, be prepared to show your tax-returns during the due diligence period. Many investors or owner-operators will want to see evidence of your sales and expenses.
Clean Up the Fat. Perhaps you have taken a “business” trip or two to Hawaii on your business. Perhaps there are expenses that shouldn’t necessarily be with the business. We encourage you to keep a clean operation and only spend cash on things that are needed for the business. Tighten the purse-strings and clean up the bottom line.
Fix the problems. This goes with both the structure (if you own it), and the operation (such as employees.) Owner-Operators and investors want to buy the best possible investment. Things like problem employees, broken windows, and broke-down equipment are red flags for buyers.
Don’t Give Up. Owners and sellers often throw-in-the towel when they decide to sell. Keep in mind that potential buyers will want to see 2 - 5 years of positive growth with the business. You need to do what you can to keep up sales and operations to ensure you can show growth, even when selling.
What’s My Business Worth?
There are dozens of factors that determine how much your business is worth but the bottom line is often the most important. Brokers value a “going-concern” business with something called EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization. This means we take your revenue, minus your expenses and add back your interest, taxes, depreciation and amortization expenses since they will be different for each buyer. Other areas a broker looks at when determining value include: Compensation of officers, number of years earnings are expected to grow, and marketability of the business.
The Process of Selling
Unlike selling your home, selling a business is a bit more complex. Buyers look at numbers, laws, reports, and history, much more than things like curb-appeal and walk-in closets. The process is complex and it can several years to sell a licensed beverage business. The process goes like this:
Your decision. Once you have made your decision, stick with it.
Find an adviser/broker. Don’t just use the local real estate agent in town. You need an adviser that has experience in marketing licensed beverage businesses and understands the laws and industry.
Get your records in order. This is a very important step. The more records we can show potential buyers the better. We will of course have those buyers sign Non-Disclosure Agreements (NDAs) to ensure that the information doesn’t leave their heads.
Broker’s Price Opinion. Your adviser will help you decide how much to sell your business based on records, sales, history, future projections, inventory lists, trade fixtures, real estate pricing, and more. There are generally two ways to sell, a going concern business and an asset sale. One means the business is doing well and can continue, the other is selling only for the assets of the business.
Time To List. A good adviser will use all marketing resources they have available such as buyer lists, industry publications, and more.
On the Market. Keep in mind that while it may take just a few weeks or months to sell a home, there are less people looking to purchase a business. A good adviser continues to update you with reports as to what he/she is doing to market your business.
An Offer. Offers are only good if they are on paper and backed up with Earnest Money. Make sure you have a solid purchase agreement backed by good financing and a solid down payment. The offer will most likely include a due diligence contingency, to allow the buyers to review your records prior to closing. Businesses with real estate will include an inspection contingency as well, similar to a home inspection.
Closing. The closing will most likely consist of the following: A Bill of Sale, transferring the business assets to the buyer, an assignment of lease, which transfers the lease to the buyer (or a warranty deed in the case of real estate), and potentially a security agreement, which has the seller retain a lien on the business. Most buyers will also ask you to sign a non-compete agreement, so you don’t open a new business right next to the one you just sold.
When You Make the Decision
When you do decide to sell, please give me a call at 651-246-6383 or email me at firstname.lastname@example.org. I am transparent with how I do things and get straight to the point. I will work hard to market your business and assist you every step of the way to ensure you get the highest price for your business.