Tips for Buying a Liquor Store

Step 1: Evaluate the Business Financially

Before making any offer, review financial performance in depth.

• Request 3 years of tax returns, P&Ls, and bank statements
• Calculate true owner benefit (add back owner salary, depreciation, and one-time expenses)
• Identify any revenue concentration risk (is one large client or event driving most sales?)
• Assess year-over-year trends — is revenue growing, flat, or declining?
• Compare revenue to the asking price to evaluate whether the valuation is reasonable

Step 2: Verify Licensing and Compliance

A liquor store without a clean, transferable license is a significantly riskier acquisition.

• Confirm the license is active and in good standing with the state ABC agency
• Verify the license type covers all current business activities
• Research whether the license is transferable in this state (and the expected timeline)
• Review compliance history for violations, suspensions, or pending actions
• Confirm TTB Alcohol Dealer Registration is current

See: buying-a-store/license-transfer.md and licensing-compliance/compliance-history.md

Step 3: Evaluate the Lease

The lease can make or break an acquisition.

• How much time remains on the current lease?
• Is the lease assignable to a new owner?
• What are the renewal options and rent escalation terms?
• Does the landlord have any right-of-first-refusal that could complicate the transfer?
• What is the rent relative to sales? (Rent should generally not exceed 5–10% of revenue for retail)

Step 4: Assess Inventory

• Get a current count and valuation of all inventory
• Understand what is included in the purchase price
• Check for aged, damaged, or near-expiry stock
• Evaluate the inventory mix — is it competitive and well-curated?

Step 5: Review Equipment and Operations

• Inspect all refrigeration, POS, and security equipment
• Note age and condition of major equipment
• Identify any deferred maintenance (old coolers, outdated POS, failing security systems)
• Factor estimated replacement costs into the purchase price negotiation

See: costs/equipment-costs.md

Step 6: Understand Seasonality

• Map out monthly revenue for the past 2–3 years
• Identify peak months and slow periods
• Understand how cash flow fluctuates and what reserves are needed to survive slow months

Step 7: Secure Financing Before Closing

• Get pre-qualified for financing before finalizing the purchase agreement
• Confirm that a lender is willing to fund based on the business's actual performance
• Factor in the license transfer timeline — lenders may not disburse funds until transfer is confirmed
• Budget for closing costs, down payment, and initial working capital reserve

See: buying-a-store/acquisition-loans.md and guides/compare-lenders.md

Step 8: Work with the Right Advisors

• A business broker with liquor retail experience can help with valuation and deal structure
• A CPA familiar with retail business acquisitions can review financials and tax implications
• An attorney should review the purchase agreement and lease assignment