When It's Time To Sell -Part 2

Last week we talked about creating something - your brewery - to sell by having clean numbers to show a potential buyer, and also a good business system that demonstrates to a buyer they are stepping into a real on-going concern.

Now to find a buyer you have a few options. The first would be to hire a business broker, who will market to potential buyers. A business broker will also have potential buyers sign a non-disclosure agreement before sharing any of your financial information. Companies like Bizbuysell have a national audience making it easy for buyers from all over the world find your brewery. Most will charge a commission of 12%, which is steep compared to real estate brokers that are typically in the 6% range.

You can also sell it yourself using brewers forums like Probrewer or even some of the locations on Facebook like the Breweries in planning group. These are good places that are not in your geographic area where you can market your business without giving away the name of your brewery at an early stage. If you decide to go more local there is always Craigslist. If I were to do that, being in Western Colorado, I wouldn't necessarily advertise in Craigslist locally. However since we get so many visitors from California and Texas, I might try Craigslist in those locations.

Personally the method I like best is to sell to a manager. You take the time to develop this manager so they can take over, and knowing that one day they will own the place, is great incentive to keep them around. I think back to our first IL Vicino on Central Avenue in Albuquerque, that we opened in May of 1992. It is still going strong almost 30 years later. This one restaurant could have provided a retirement for at least three people. Let me explain.

If you sell to a manager, you are going to carry the loan on the business. Let’s say the business is worth $700,000. This is just the business, not the building. That’s another story I won’t get into here. You would take this $700,000 note and amortize it for seven to ten years at a typical business interest rate. You could throw in a balloon payment to finish the loan off in five years if you want. If you appraised the business correctly, there should be enough profits to pay you every month over that time frame, and still have extra money left over for the manager.

Here is the kicker. Your excellent business system also includes a monthly audit. As long as you are receiving payments, you will audit, or have someone else do a monthly audit to make sure the new owners are following all the systems, keeping the place clean and in good repair, and keeping up with the books. You also get a back-up of the Quickbooks file every month. This way you can make sure your investment is being taken care of. If the manager you sold your brewery to doesn’t like having you nosing around, then the simple thing for them would be to go get a bank loan or find an investor and pay you off.

That $700,000 with interest is going to be a bit over $900,000. That’s a pretty nice chunk of money coming your way. Let’s say you had more than one brewery or restaurant and you did this with each one of them. Your retirement is pretty set.

What I like about this plan for selling your brewery is it really is a win/win. You get out with a buyer you trust, because you have already been working with them, and you know they understand your systems. They win because they get to own a business without getting a bank loan, or having to deal with partners, which hardly ever works out.

On top of that, once they have paid you off, they could turn around and sell the business again to their manager, thus funding their retirement.

The key to making all this work is you need to have a very clean business system to operate your brewery. If you don’t have one or are not quite sure how to create one, I cover that in my book The Brewery Operations Manual. The book covers much more, but the main section of the book is about creating a good operations system. I didn’t make it up. All successful, long-running businesses have very solid operating systems that run their business. This is what separates the “mom & pops” from the professionals.

Building a successful business is a real high, but sometimes running a business for ten or twenty years can become a drag. I put this out there just for you to think about and plan. It’s much easier to sell your business if you plan on your exit strategy ahead of time instead of waiting until you are a soulless hunk of a burned out brewery owner. Having a plan in place will make the day to day operations of your business a wee bit more manageable. Just like your serving tanks, you need a pressure relief valve. An exit strategy is just such a valve.

Sorry this is out a day early, but our bike trip was great and we will be camping in an area with no cell service tomorrow. Have a great holiday weekend!