Still and Production Condition, Fire and Building Codes as Diligence Items
The still house is the heart of a distillery, and buyers naturally want to know what shape it is in. But the review goes beyond whether the stills work. Distilleries handle flammable vapors and spirits, operate boilers and pressure systems and store large quantities of product, so fire, building and safety requirements are part of evaluating any existing facility. Reviewing still and production condition, along with code compliance, helps a buyer understand what it is acquiring and what it may need to address after closing.
This article treats production systems and facility codes as due diligence items for buyers of existing, operating craft distilleries. It does not address financing equipment on its own, adding production or building a new facility. Fire, building, electrical, environmental and safety requirements vary by jurisdiction, and buyers should rely on qualified engineers, inspectors, fire protection professionals and attorneys. Nothing here is legal, engineering or safety advice.
Production Systems to Review
- Stills and columns: condition, repairs, cleaning practices and any known issues
- Mash and fermentation: cookers, fermenters, pumps and temperature control
- Utilities: boilers, steam, chillers, cooling water and electrical service
- Storage: tanks, barrel racking and warehouse conditions
- Bottling and packaging: filling, labeling and related systems
- Controls and safety devices: gauges, relief valves, vapor detection and ventilation
Maintenance and Ownership Records
Buyers should request maintenance logs, service records, inspection reports and any warranties. They should also confirm which items are owned outright, which are leased and which are subject to liens, since leased or encumbered items may not come with the business as expected. Our craft distillery due diligence checklist covers these requests.
Fire and Building Code Questions
- Inspection history from fire and building officials and any open items
- Occupancy approvals for production, storage, tasting and events
- How spirits storage, ventilation and electrical systems are addressed in approvals
- Fire suppression, alarm and emergency systems and their service records
- Whether any past changes to the facility were made with required approvals
Requirements depend on the specific building, use and location. A buyer should have qualified professionals review the facility and should not assume that past approvals cover current operations or planned changes.
Connection to Permits
Facility approvals may be tied to the distillery’s permits and local licenses, so code issues can affect the buyer’s ability to obtain approvals. See our article on distillery permits and licenses.
Environmental and Wastewater Matters
Distilling produces spent grain, stillage and wastewater. Buyers should understand how these are handled, whether any local agreements or permits apply and whether there have been complaints or notices. These questions belong with qualified professionals.
How Condition Affects Price
Deferred maintenance, needed repairs or open code items may lead buyers to adjust price, request seller repairs before closing or hold back part of the price. Our guide to craft distillery valuation explains how facility condition fits into value.
What Lenders Review
Lenders may ask for inspection reports, an equipment list, lien searches and confirmation of insurance. Unresolved safety issues can affect a lender’s review. Our article on craft distillery loan requirements describes the documents frequently requested.
For Sellers
Sellers can help by assembling maintenance and inspection records and addressing known issues before going to market. See our guide on how to sell a craft distillery.
US Professional Funding helps buyers finance the acquisition of existing, operating craft distilleries. Learn more about our craft distillery acquisition financing.
