Buying and Selling a Bar - Attorney
Wednesday, August 12, 2009 at 11:16PM 
Owning a bar. At some point, whether it be while watching Cheers or hanging out of the local pub, most guys envision how cool it would be to own a bar. The camaraderie. The chance to be "that guy" that owns a bar. People who own bars, though, will tell you that it is a rough business. First of all, it is a cash business by nature. Bar owners are constantly worried about employees skimming off the top - although the commonplace use of credit and debit cards has minimized that to a degree. Bar owners also are forced to deal with the unique liabilities arising from selling alcoholic beverages.
All that being said, a bar is a lot like any other business, and bars are bought and sold as businesses all the time. The sale takes place just like any other sale - by selling assets, selling stock, via merger...etc. One of the unique aspects of selling a bar is the disposition of the liquor license. Typically a liquor license / permit is issued for a particular location and to a particular business entity. Any time the ownership of the bar business changes (whether through an asset sale or a stock sale), the approval of local and/or state regulators will be required in order to transfer the license. In Indiana, for example, the approval of the Alcohol and Tobacco Commission is required. This process can take time, sometimes up to 3 months (or more). Many times the buyer of a bar will want to operate the bar in the interim period while the approval is taking place. This is a very tricky process since legally the buyer of the bar may not sell alcoholic beverages until the license has been transferred from the seller.
One way to accomplish this is via a management agreement that allows the buyer to "manage" the bar during the time when the license transfer is being approved. It is important that this agreement is done right and in accordance with applicable laws. Something important to keep in mind - if the assets being sold include existing inventory of alcoholic beverage, title to the inventory should NOT change hands until the license/permit transfer has been approved.
Reader Comments (1)
Regarding the liquor license, having the buyer to "manage" the bar during the time when the license transfer is being approved is a great tip! Also, one can apply for
small business loans for extra cash flow and protection.