Selling your beer business, or buying another one, is a big deal. The stakes are high.
For sellers, this may be your one shot to cash out, and you’ve got to get it right.
For buyers, there is a lot of money on the line, and a lot of pressure to combine businesses the right way.
They say debt is a good motivator to get you out of bed in the morning. I can attest to this fact. Making sure you can pay back that debt is a huge part of any deal.
In the coming weeks I’ll share some of the things I’ve learned buying and selling beer businesses. I’ve made my fair share of mistakes and figured out a few things along the way.
The goal is to pass on what I’ve learned so that you can avoid the missteps and take advantage of the short cuts.
Below are the key points we’ll cover together:
- Thinking of buying or selling? Ask this question first
- The single most important consideration in any deal
- Valuation methods: What’s it worth?
- What to expect: 5 stages of the deal process
- 3 deal killers and how to avoid them
This list is by no means comprehensive. There are many, many more details you’ll need to know about buying or selling.
A whole book can be written on how to make ready for a sale, how to perform due diligence, and the detailed steps to build a financial pro forma. If you’re interested in all these details, we have a library of financial training resources for beer wholesalers. You can learn more about that here.
Ask This Question First
There are a million questions to ask when considering the sale or acquisition of a wholesaler business.
In my experience, the most important first question is: Why?
Why exactly do you want to buy (or sell) a beer wholesaler business?
What are your goals?
And maybe my favorite question, what does success look like?
The answers to these questions may be clear.
We want to buy to increase our market share, achieve synergies, and gain economies of scale.
We want to sell because we don’t have the resources to compete any longer, cash flows no longer support the needs of the owners, and the value of our business right now is so high, we’d be crazy not to sell.
These may be good answers.
Or not.
The decision to buy or sell is a big one. Maybe the biggest business decision you’ll ever make.
If you’re considering a sale, or a purchase, I invite you to imagine what success looks like.
Write it out in words and numbers. Sit with it. Put it aside and come back to it after a good night’s sleep.
What does success look like? It might be the most important question you ask.
I’ve found that the most successful transactions begin with clarity of purpose. When buyers and sellers understand exactly what they’re trying to accomplish, every decision that follows becomes easier.
Valuation methods make more sense and negotiations become more productive because everyone knows what they’re ultimately trying to achieve.
So before you build a valuation model or call an investment banker, take a little time to answer a few questions on paper.
Why am I considering this?
What do I hope to accomplish?
What does success look like one year after the deal closes?
Those answers may become the foundation for every important decision that follows.
In the next post, we’ll discuss what I believe is the single most important financial test in any acquisition: Does the deal actually cash flow?
It’s a simple concept that’s surprisingly easy to overlook and one that can determine whether an acquisition creates value or becomes a burden.
P.S. Whether you’re planning a transaction next year or ten years from now, we’re here to help you build a business that’s ready when opportunity comes.
That’s exactly what we do inside Beer Business Finance – we help beer wholesalers install Financial Operating Systems that improve profitability, strengthen cash flow, increase business value, and create more strategic options for the future.
