Craft Brewery Due Diligence Checklist for Buyers
Buying a brewery means taking on a regulated production facility, a set of beers and a brand, a taproom or brewpub, and frequently a web of distributor and retail relationships. Careful craft brewery due diligence helps buyers confirm what they are paying for and gives lenders the information they need to evaluate the deal. The checklist below organizes the review by area.
This article is general information for buyers of existing, operating craft breweries, brewpubs and taproom breweries. Requirements vary by state, locality and transaction. Buyers should rely on qualified attorneys, accountants and other professionals for their review. Nothing here is legal, tax or regulatory advice.
Financial Records
- Several years of tax returns and financial statements that reconcile with each other
- Sales by channel: taproom, packaged to go, food, events, self-distribution and distributors
- Sales by beer and by account, and monthly results to show seasonal patterns
- Point-of-sale reports reconciled to bank deposits
- Documentation for owner compensation and proposed add-backs
- A complete schedule of existing debt, leases and liens
Excise Tax and Compliance History
Breweries file production and excise tax reports at more than one level of government. Buyers should ask accountants and counsel to review filings, payment history and any notices or audits. Unpaid obligations may follow the business or its assets, depending on structure.
Permits and Licenses
- Every federal, state and local permit and license, with the holder and premises listed
- Label approvals and any formula approvals, where required
- Any violations, notices or pending matters
- The plan and timing for the buyer’s own applications
See our article on brewery permits and licenses.
Distribution and Accounts
- Every distributor agreement, with territory, brands covered and transfer or termination terms
- Self-distributed account lists and recent order history
- Any disputes or notices from distributors or retailers
Read about brewery distributor agreements before relying on wholesale revenue.
Brewhouse, Cellar and Packaging
- An equipment list showing what is owned, leased or financed
- Maintenance logs, repair history and any known issues
- Quality control records, lab practices and any product recalls or complaints
Our article on brewhouse and cellar equipment explains what to look for.
Real Estate, Lease and Utilities
- The lease, assignment terms and landlord consent requirements, or title and survey if real estate is included
- Zoning and use approvals for brewing and taproom operations
- Water, power, gas and wastewater arrangements and any surcharges or compliance issues
Environmental and wastewater matters should be reviewed by qualified professionals. See our article on brewery real estate and lease review.
Brand, Recipes and People
- Trademark ownership, registrations and any disputes, reviewed with IP counsel
- Written recipes, process documentation and who holds them
- Staff roster, roles, compensation and plans of the head brewer and key staff
Read our article on brewery brand and recipes.
Inventory, Insurance and Contracts
- Finished beer, raw materials and packaging, with a plan to count and value them at closing
- Insurance policies and claims history, including liquor liability
- Supplier contracts, kitchen or food partner arrangements and event agreements
What Lenders Will Review
Lenders frequently ask for many of the same documents, along with the buyer’s resume, personal financial statement and transition plan. Our article on craft brewery loan requirements explains the documentation frequently requested.
US Professional Funding helps buyers finance the acquisition of existing, operating craft breweries and brewpubs. Learn more about our craft brewery acquisition financing.
