Brewhouse and Cellar Equipment Condition as a Due Diligence Item
Walk into the production side of a brewery and much of what you see is stainless steel: the brewhouse, fermenters, brite tanks, a glycol system, a cooler and possibly a canning or bottling line. When a buyer acquires an existing brewery, the condition of brewhouse and cellar equipment can affect product quality, operating costs and how much the buyer will need to spend after closing. Reviewing it carefully is part of understanding what the business is really worth.
This article is general information for buyers of existing, operating craft breweries, brewpubs and taproom breweries. It treats equipment as a due diligence item in an acquisition and does not address financing equipment on its own or adding production equipment. Buyers should rely on qualified inspectors, engineers and attorneys. Nothing here is legal or technical advice.
What to Inventory
- Brewhouse: mash and lauter vessels, kettle, whirlpool, heat source and controls
- Cellar: fermenters, brite tanks, any barrels or foeders and their valves and fittings
- Cooling: glycol chiller, lines and walk-in coolers
- Utilities: boiler or steam system, water treatment, compressed air and carbon dioxide systems
- Packaging: canning or bottling equipment, kegs and keg washing
- Taproom and kitchen: draft systems, coolers and kitchen equipment in a brewpub
Assessing Condition
Buyers frequently review maintenance logs, repair invoices and any service agreements, and they may hire an experienced inspector to evaluate welds, valves, jackets, pumps, controls and the chiller. Signs of deferred maintenance can include recurring repairs, improvised fixes or quality issues traced to sanitation or temperature control. Quality control records and customer complaints can point to equipment problems as well.
Ownership, Leases and Liens
Not everything in the building may belong to the seller. Some equipment may be leased, financed with liens or owned by the landlord as a fixture. Kegs may be owned, leased or tracked through a third party. Buyers should confirm title, lien searches and lease terms, and plan to clear liens at closing. Our craft brewery due diligence checklist includes these items.
Fit With the Building
Equipment depends on the building around it: floor drains, slope and loading, ventilation, electrical and gas service, water supply and wastewater handling. Some equipment may be difficult or costly to move if the lease ends. See our article on brewery real estate and lease review.
How Condition Affects Price
Equipment that has been well maintained and matches the brewery’s current output may support the asking price. Equipment near the end of its useful life, or a missing piece the buyer will need to add, may justify a lower price or a seller credit. Our guide to craft brewery valuation explains how buyers weigh these factors.
What Lenders Consider
In an acquisition, lenders evaluate equipment mainly as part of the overall business and its collateral. They may ask for an equipment list, an appraisal and lien searches. They also want to know whether near-term repairs could strain cash flow after closing. See our article on craft brewery loan requirements.
Planning for Repairs and Supplies
Even well-kept brewhouses need parts, maintenance and occasional repairs, and ingredients and packaging must be purchased before beer is sold. Buyers should plan cash for these needs; see our page on craft brewery working capital and lines of credit.
US Professional Funding helps buyers finance the acquisition of existing, operating craft breweries as complete businesses. Learn more about our craft brewery acquisition financing.
