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If you own a private retail liquor store or any private business with a license to sell alcohol, in most cases when you sell the business, you sell the liquor license with it. Most buyers want to purchase a turnkey operation including the liquor license. Occasionally, someone who wants to open a private retail liquor store will want to purchase the license alone, so they can relocate the license and then build from the ground up.
Types of businesses that usually sell their liquor license along with all other store assets:
- Private retail liquor store
- Wine store
- Pubs and nightclubs
Liquor License Valuation
The current estimated market value for a private liquor store license (called a “Licensee Retail Store” or “LRS” in BC, and a “Class D” license in Alberta) is approximately $800K. A private liquor store sold with its license can fetch 7 times EBITA (Earnings Before Interest, Taxes and Amortization) in BC and 3 x EBITA in Alberta, with the cities of Calgary and Edmonton at 5 X EBITA. A pub and its license are currently worth approximately 3 times EBITA.
Know Your Numbers
If you’re considering selling your retail liquor business as a turnkey operation with its liquor license, you’ll need to know your numbers. It’s not enough to just talk about earnings or potential earnings. Earnings may be a performance indicator, but serious buyers want to know the entire story – a story that can only be told by more extensive audits and reports. If you have a liquorlicense for sale, the initial investment for reports and audits is well worth your time and expense.
Before putting your business and its liquor license up for sale, consider doing the following:
Have a complete set of current and past financial statements available for the buyer, including an income statement, balance sheet, and cash flow statement. If you do your own books, have an in-house bookkeeper or accountant on retainer, providing these may be as easy as printing reports from accounting or bookkeeping software. Complete, up-to-date financial statements increase the buyer’s confidence and will help them see the business’s potential in the numbers. When you sell a liquor license, “Numbers speak louder than words”.
An experienced liquor license consultant (like Thrive Liquor & Cannabis Advisors) can “optimize” your operation by auditing product, staff, in-store marketing and layout. Once the audit is complete, our consultants can make recommendations to cut losers from your inventory, increase visibility of high-value SKUs, enhance training, improve layout, and more. An operations audit is best undertaken many months (6 months to 1 year) before putting the business and its liquor license up for sale. Doing so gives you time to implement our recommendations and reap the benefits (more profit) which will make it easier to sell the business.
A budget that compares projected income and expenses with actuals is an invaluable tool. It shows the business’s earnings potential at a glance and can help a buyer visualize the seasonal peaks and valleys that all business’s experience.
A financial forecast based on past financial performance can help a buyer see the potential for profit growth.
Extensive Staffing Audit
Rectifying staffing issues before you sell your business can make selling the business much easier. If your business has trouble retaining staff or motivating employees to work to their full potential, a staffing audit may reveal the underlying issues.
Selling a Liquor License in BC or Alberta?
If you’re considering sellinga liquor license in BC or Alberta, Rebecca Hardin, owner and lead liquor licensing consulting at Thrive Liquor & Cannabis Advisors can help you find a buyer or audit your business before you put it and its liquor license up for sale.