Pricing

Solutions

Restaurant Types

Learn

Learn

Visit our hub to explore all types of videos, articles and resources.

Start Learning

Selling a Bar: How to Sell a Bar Business

Grace JidounAuthor

How to Sell a Bar Business: Guide to Find Bar Buyers

Contrary to popular belief, owning a bar is not one big party. Bar owners are a passionate and extremely hardworking bunch. Just like any small business, there are ebbs and flows in profitability, and there may come a time when you need to sell. Perhaps your killer craft beer has a devoted following, and you want to cash out while the going is good. You may want to transition from a traditional sports bar to a speakeasy or try something new altogether. Retirement, partnership disputes, divorce, and plain old burnout are commonly cited reasons for selling a small business.

No matter what the reasons or type of venue, all bar owners — and all entrepreneurs, for that matter — go through a similar process when selling. If you think all you need to do is find a buyer to sign on the dotted line, it’s time to take off the beer goggles.

Bars have rallied since the pandemic, but there are still many challenges facing the industry, from staff shortages and supply chain issues to climate disasters — all of which are out of your control and complicate the selling process.

The good news is that people continue to shift away from drinking at home to drinking at public venues; by 2025, a projected 47% of spending and 25% of volume consumption of beer will be attributed to bars, restaurants, and breweries. The best time to sell is when demand is trending upwards.

How do you successfully sell a bar in this market? As the wise Master Yoda once told Luke Skywalker, “Do. Or do not. There is no try.” In other words, accomplishing a difficult task starts with taking that first step and pushing your doubts aside. Beyond that, you’ll need to prepare, prepare, prepare. In this article, we’ll walk you through the steps of selling a bar, including how to determine the value of your business, polish up your finances, and prepare your bar for sale — and share advice on when to call in the financial pros.

Preparing to Sell Your Bar

Most entrepreneurs are excited to launch a new bar venue, not sell it. So when they decide to sell, many do it at the wrong time or in the wrong way. To avoid such expensive mistakes, you can implement two key strategies from the outset.

Assess Your Reasons For Selling

First, take a moment and reflect on your reasons for selling. The goal is to honestly reflect on your motivations and, more importantly, your expectations for the sale. Jot down your findings and solicit honest feedback from a trusted business associate or fellow bar owner. Without a reality check, no amount of marketing, networking, and negotiating will get you to where you want to be. 

Evaluate the financial health of your bar

What could be more important than knowing where you want to be? The answer: Take a hard look at where you are right now. Gaining financial clarity before you sell is key. Luckily, there is a tried-and-true method called the SWOT Analysis. It is a powerful framework that evaluates a business’s financial health from four perspectives: strengths, weaknesses, opportunities, and threats. 

To get started, collect all your bar’s financial records and statements from the past three to five years. To assess using SWOT, ask yourself these simple questions: What works for my venue (strengths)? What’s not working (weaknesses)? What are growth opportunities my bar can capitalize on (opportunities)? What external factors can harm my bar (threats)? Dive deeper into this strategy with our article, How to Prepare a Restaurant SWOT Analysis.  

Determining the Value of Your Bar

Determining the value of your bar is tricky, as no two are exactly alike and worth the same amount of money. Location, technology, neighborhood competition, supply chains, the national economy, and market trends are all factors that impact your bar’s worth in the eyes of buyers. Getting this right is crucial, as you can’t demand a fair asking price without accurate information.

Work with a professional appraiser

A professional appraiser on your team will be worth their weight in gold, as they can do all the heavy lifting for you. A good appraiser will have their finger on the pulse of current market trends and conditions to provide an accurate valuation. Beyond just your brand, you’ll need to know the value of your business assets (brewery equipment, furniture, décor, technology) as well as the value of the buildings and land owned by your bar, which will require their own appraisers. The more professional valuation information you have at your fingertips, the stronger your case will be when you’re at the negotiating table.

Evaluate market conditions and trends

When it comes to this uncertain economy, future predictions are a bit futile. But it’s worth brushing up on your market analysis techniques to get a handle on bar and entertainment trends that are resonating right now. Take a fresh look at your competitors, customers, and the state of the bar industry, both locally and nationwide. By evaluating market trends and conditions, you’ll gain insight into how your unique bar fits into the current climate (not where you stood last year or the year before), which will come in handy during the next steps of the selling process.

Preparing Your Bar for Sale

Now that you know your current value, you can set the wheels in motion for the sale. It’s important to get all aspects of your bar in tip-top shape before you put it on the market, from sprucing up the physical appearance to organizing your financial and legal documents. 

Find a broker (or decide to do it yourself!)

Perhaps you’re a seasoned restauranteur who buys up breweries and cocktail lounges like they’re going out of style. In this case, you might want to act as your own broker. But remember, you only have one shot to get it right. There are many complex moving parts to consider: brokers will hype up your bar, vet and qualify prospective buyers, negotiate prices, facilitate the process of due diligence, and more. This is why even veteran restauranteurs turn to brokers. You’ll need time to focus on the following three issues, which are biggies. 

Enhance curb appeal and update equipment and technology

Just like with a fixer-upper house, if the tabletops are worn, the signage is broken, and the drapes are dusty, you won’t be able to entice as many potential buyers. Likewise, outdated brewery equipment and point-of-sale tech can also be big turnoffs. Updating your equipment and implementing a technology upgrade will make your bar all the more attractive to buyers.

Organize financial and operational documents

 Are your important financial statements just as muddled as your signature mojito? Now is the time to clean up your accounting software, prepare financial statements, resolve outstanding liabilities, and organize other fundamental financial metrics.

Resolve any outstanding legal or regulatory issues

 If there’s one area that can sink a deal before it even gets started, it’s this. Even if you don’t need to make substantial changes, it’s best to begin reviewing documentation as soon as possible. Ensure all leases are in good order, all taxes have been paid, and there are no liens against any assets that have not been disclosed.  Your financial and operational documentation should be clean and up-to-date. You may consider an independent audit of your financials to ease any worries for potential buyers.

Negotiating, Closing the Sale, and Transitioning Ownership

Create an Attractive and Engaging Listing

This is where your market research comes into play. What makes your bar memorable and different from all the rest? When creating your listing, you’ll need to be savvy about what investors look for in a bar, what motivates them to buy, and what kind of information they are most interested in. For inspiration, check out other bars for sale on sites like BizBuySell, BizQuest, and BusinessBroker.net.

Leverage Industry Networks and Connections

That old business adage rings true: It’s all about who you know — and who knows you. Now’s the time to leverage the connections you’ve made throughout your career. Get the word out through your network (including friends and family) that you’re looking for buyers, as the right person may not be who you’d expect. Take a multi-pronged approach to networking, mixing in-person events with social media and email — and don’t dismiss the impact of picking up the phone for a good old-fashioned conversation! Building relationships with potential buyers will not happen overnight. It might involve dinners or hanging out at your bar and discussing business over drinks. It’s essential to build trust, and that requires an investment of time.

Conduct Due Diligence on Potential Buyers

Just as the buyer will do their due diligence on your business, you should also investigate potential buyers. You will want to make sure someone not only has the money to buy your bar but will also be able to run it successfully. This entails a review of all their financial documents, including credit reports, income tax returns, and liabilities such as rent on other properties and monthly expenses. Don’t be shy about running background checks on potential buyers or asking for personal and professional references. Additionally, ask to see their business plan so you can be sure they have a solid roadmap to success.

Negotiate Price, Terms, and Contingencies

If you’ve hired a broker, this is their opportunity to shine and demonstrate their value. They’ll determine a fair market value price, finalize the terms of the agreement, and negotiate contingencies (conditions that the buyer demands be met before moving forward). 

Finalize the Sale and Transfer Ownership

It may take time to close a deal, and a lot can happen during that time. It’s essential to stay focused and not spend your profits (or take off for Cabo!) until the deal is officially closed. You’ll still need to hit profitability goals and other financial metrics while in limbo. There are important loose ends to tie up, such as informing your regulars and notifying your bartenders, barbacks, kitchen staff, and other employees. You’ll also need to ensure a smooth transition for your suppliers. Consider this time “business as usual” until the sale is complete.

Now comes the final step: transferring the ownership rights of your bar to the buyer. There are a few options to consider. You can do an outright sale, a gradual sale (with a payment plan), or a lease agreement, where you transfer ownership through a lease. That said, many sellers prefer an outright sale to be paid in full on closing, whether in cash or through a loan. You’ll want to check with your state’s guidelines regarding registering the sale with tax agencies and other legal obligations.

***

There’s that old saying, “You learn a lot about human nature in a bar.” More than just a physical space to sit and drink, bars are community and cultural hubs where people come together and build relationships. How can you possibly put a dollar amount on that? The only way to get the fair price you dream of is by doing your due diligence and taking it one step at a time.

Is this article helpful?

DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.