Although it may at first seem like an overwhelming process, the sale of your wine and beer tavern does not have to stress. This guide helps you prepare your exit strategy by discussing the valuation and sale process for wine and beer taverns.
About Wine and Beer Taverns
The wine and beer tavern industry engage in the sale of alcoholic beverages for consumption within their establishment. This is usually considered a place of drinking and nightlife. Food is often offered but may be more limited than other establishment types (i.e. bars or pubs). Wine and beer taverns are considered different from brew pubs, although the two business models are often confused. There are separate licenses for each type in most states.
How to Value a Wine and Beer Tavern
The first step to any exit strategy is determining how much your wine and beer tavern is worth on the market. That is to say, you want to determine your fair market value (FMV) — the amount prospective buyers are most likely going to offer. You can determine your valuation with a market approach, which considers metrics such as your seller’s discretionary earnings (SDE) and rule of thumb data (also known as industry multiples). Here is the rule of thumb data for the wine and beer tavern industry:
- Wine and beer taverns sold between 2.13 and 2.20 times the Seller’s Discretionary Earnings (SDE)
- Wine and beer taverns sold between 1.85 and 5.59 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Wine and beer taverns sold between 0.31 and 0.96 times the annual net sales
How to Sell a Wine and Beer Tavern
You can sell your wine and beer tavern by following a structured process and working with a qualified and experienced business broker who understands your industry. The most notable steps you can expect include:
- Determine your sales strategy
- Collect the documents you need for the sale
- Find a qualified buyer for your wine and beer tavern
- Provide an opportunity for due diligence
- Close the sale and transfer ownership
Your experience and timeline may look slightly different than the standard process presented below. We recommend speaking with a business broker about the specifics of your wine and beer tavern to ensure a personalized strategy that works.
Determine Your Sales Strategy
After you receive your valuation, you should determine when (and for how much) you sell your wine and beer tavern. Of course, the primary goal might be to maximize the sale price. However, you may have other goals that you should establish during this first step, such as finding a buyer that keeps your employees and continues the work you started within the community. Your broker can help you establish your sales approach.
Collect The Documents You Need for The Sale
It is best to prepare your documents before the marketing phase. Otherwise, you could run into snags along the way that delay the process and cause prospective buyers to back out of offers, negotiations, and LOIs. The most notable documents you need to gather include (but may not be limited to) your tax returns and other financial statements, business license (and other operational licenses), and your insurance and lease policies.
Find a Qualified Buyer for Your Wine and Beer Tavern
This step is where your business broker shines and makes your life much easier. It is nearly impossible to maintain the confidentiality of the sale if you try and sell on your own. Experienced business brokers have deep connections and access to databases and networks that they can leverage to bring your wine and beer tavern’s sales memorandum in front of hundreds of prospective buyers. They also understand how to use blind listings, NDAs, and other strategies to ensure news of your sale is not leaked. Ultimately, this step ends with a qualified buyer signing a letter of intent (LOI). Of course, negotiations, contingency discussions, and more take place during this step of the sales process as well.
Provide an Opportunity for Due Diligence
The buyer must provide the seller with an opportunity to review the business details and ensure they are comfortable moving forward with the purchase. This stage is known as due diligence. Your broker is there to help ensure the process moves quickly. You will need to provide legal and financial documents, such as those discussed above.
Close The Sale and Transfer Ownership
The sale closing is the final step, but before you celebrate, there is still some work to do. There are certain documents you must bring with you to closing, such as a copy of the purchase agreement, insurance policy, and other legal information you will need to transfer ownership. Your broker and attorney can assist you with ensuring you are fully prepared. You will also notify employees (and customers) that there is new ownership. Lastly, you will sign the purchase agreement and confirm that the payment has been sent.
Receive a Free Business Valuation From an Experienced Business Broker
We help sell wine and beer taverns (and companies with a similar business model) sell for fair market value. You can get started with a free business valuation with a professional and experienced business broker here at Sigma Mergers and Acquisitions. It is our passion to help business owners execute their exit strategy, and we look forward to assisting you with your sale.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
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