If I were to buy an existing brewery

I’ve mentioned this before, but sometimes if you are having difficulty finding a location to build a brewery, an avenue to explore would be to buy an existing one.

I bring this up because on a recent trip to British Columbia I met someone who wanted to sell their business and told me, “to get into Canada, owning at least 51% of a business means you get a work permit, which could lead to a permanent residency.” Now I’m not looking at moving to Canada, at least not today, but what if I was to buy a brewery? How would I go about that?

Most likely I would find such a business by doing a Google search on breweries for sale. Try it, you will be amazed at how many show up.

Next I would narrow it down to a location I liked. After that comes the price. And if it’s in the listing, how long their lease is and how much the rent is.

That’s about all you will find out from an online search. To go deeper you will need to contact the broker selling the business and most likely sign a non-disclosure agreement, since they are going to be sharing in-depth financial information. But once you get those details, this is what I would look for.

• How long have they been in business? If it’s a long time, are they just burnt out but running a profitable business? Maybe they want to retire, or Covid put them over the edge having to run a business through all that. If they have only been open a few years, they might not know what they are doing so you should be able to get a deal.

• What comes with the asking price? I want to see a detailed itemized list of all equipment including pictures.

• Profit and loss statements. This is crucial. Hopefully they have kept good records and I want to do a deep dive into these to understand all their costs. If you don’t understand P&L’s get someone to look them over for you.

• Will the owner finance any of the asking price? Let’s say they are asking 200k. Typically in an owner finance situation, I would put 20% or 40k as a down payment, but they would finance the rest. Because it’s an existing business anything you do will be some inexpensive remodel. This means you can possibly get into business for under 100k. Not bad.

• I want to see how they run their business. Do they have a good business system in place? Are they doing inventories? Do they have good bookkeeping systems?What things can I bring to the table that will either reduce costs or increase sales.

• How good is their beer? Is the brewer any good or lazy when it comes to cleaning. If the brewer sucks, can I replace them or can I re-train them?

• I’d like to go to the location without them knowing who I am so I can get a sense of the vibe, or oyster. I also want to hang out in the neighborhood to get a feel for it. Does it feel safe? Is there any walking traffic?

• The building condition also. Does it look tired? Are all the lights working? Don’t laugh, this could just be the burnt out manager not replacing bulbs.

• I like to look on a site called City Data. You can get a lot of information about a town this way: financial drivers of the city, crime, schools, education, hospitals, population and so on.

• I need to decide to take over their LLC or corporation, or start a new one. By this I mean if you buy an existing business, you assume all their liabilities as well. In your closing documents they will sign an affidavit that there are no liens or that all the taxes have been paid, but they could lie also. In most cases I would come up with an arrangement whereby we use their business structure so we are legal making beer, but have applied for a new brewery license under a new company. When our approval goes through we stop using the old business entity. In other words we never owned the old entity, just had an agreement with the old owner. I prefer to start out with a clean business model.

So will I be buying another brewery in the near future? I hope not. I’m very happy here in Colorado. But if I did, I think I would look to buy an existing one rather than start one from scratch!