How to Buy a Craft Distillery: A Step-by-Step Guide for Buyers
An established craft distillery can offer a buyer things that take years to build: an operating still house, a tasting room with regular visitors, recognized labels, distributor relationships and, in many cases, barrels of spirits already aging toward release. For a buyer who wants to buy a craft distillery, those assets also bring unusual questions. Permits are tightly regulated, a meaningful share of value may sit in inventory that is not yet sellable, and the knowledge behind the products may rest with a few people.
This article is general guidance for buyers of existing, operating craft distilleries. It does not address starting a new distillery, building a new facility or financing equipment on its own. Permit, tax and distribution rules vary by state and locality and change over time. Nothing here is legal, tax or regulatory advice; buyers should work with qualified attorneys, accountants and other professionals.
Step 1: Define What You Want to Own
Craft distilleries differ widely. Some earn much of their revenue from a tasting room, cocktail service and events. Others focus on wholesale distribution across several states. Some distill everything on site, while others blend or bottle spirits sourced from other producers alongside their own. Deciding which model fits your experience and goals helps narrow the search and frames every later question.
Step 2: Review the Financials Early
Request several years of tax returns, financial statements and sales reports by channel and by product. Buyers will want to see how revenue splits between the tasting room, direct sales and wholesale, and how inventory is accounted for. Spirits that are aging can tie up cash for long periods, so reported profit and actual cash flow may look quite different.
Step 3: Understand How Value Is Built
Price discussions usually begin with verified earnings, but distilleries add layers: finished goods, aging stock, brand strength, channel mix and how dependent the business is on the owner or head distiller. Our guide to craft distillery valuation explains how these factors interact.
Step 4: Plan for Permits From the Start
Federal, state and local permits and licenses for producing and selling spirits generally do not transfer to a new owner automatically. A change in ownership may require new applications, amended filings or approvals before the buyer can operate. Because this can affect the closing timeline and structure, it should be addressed early with qualified counsel. See our article on distillery permits and licenses.
Step 5: Examine the Aging Inventory
Barrels in the warehouse may represent future revenue, but their value depends on records, condition, tax status and whether the spirits will turn out as expected. Buyers frequently negotiate how inventory is counted and priced separately from the rest of the business. Our article on aging spirits inventory covers how buyers review it.
Step 6: Conduct Thorough Due Diligence
Due diligence tests the seller’s story against records: financials, permits and compliance history, inventory, supply contracts, distributor agreements, still and facility condition, fire and building code questions, trademarks, the lease and staff. Our craft distillery due diligence checklist lays out what buyers typically request.
Step 7: Arrange Financing
Many buyers finance part of the purchase. Depending on the business, the buyer and lender review, options may include SBA-backed loans, conventional loans and seller financing. Lenders will focus on documented cash flow, the buyer’s experience and how permits and inventory will be handled. Our article on SBA loans for craft distilleries explains how SBA financing may apply. Every loan is subject to lender approval, and nothing here is a commitment to lend.
Step 8: Plan the Transition
A smooth handover protects the value you are buying. That may include keeping the head distiller and tasting room team, introducing the new owner to distributors and key accounts, and arranging for the seller to remain available for a period where permitted.
Common Mistakes to Avoid
- Assuming permits, label approvals or distribution rights will simply carry over
- Paying for aging inventory without verifying records, condition and tax status
- Overlooking whether products are distilled on site or sourced under contracts that may end
- Underestimating how much product knowledge sits with one person
- Treating fire, building and safety requirements as an afterthought rather than a diligence item
- Focusing on revenue rather than documented cash flow
US Professional Funding helps buyers finance the acquisition of existing, operating craft distilleries. Learn more about our craft distillery acquisition financing.
