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How to Sell a Pub

How to Sell a Pub

Here we outline how to sell a pub from beginning to end

With the right previous experience, running a pub can prove to be more than just hard work. This is a sociable way of life for most publicans and many pub owners and tenants enjoy two or three decades in the business.

If, however, the decision to move on arrives, it can be helpful to understand when and how to go about selling it. Here we outline how to sell a pub from beginning to end.

Knowing when to Sell your Pub

There are a lot of reasons that could influence the decision to sell your pub and selling a pub is not always only about getting the best price.

The time-consuming nature of a pub can become less appealing to an owner as they shift into a different phase of life or, having nurtured a pub for a number of years, they could be looking for a different experience.

For those with drive, ambition and people skills, pubs can provide a special sense of achievement and job satisfaction and, hopefully, findingthe right buyer will help you to know when to sell your pub.

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Preparing your Pub for Sale

Preparing your pub for sale can be a complicated process and, as with many small businesses, there are a few things that you need to consider carefully.

During the process of selling your pub you will have to share information so you might want to make this subject to a confidentiality agreement (also termed a non-disclosure agreement).

Sell Your Business When you have agreed on a selling price, you will formalise the deal with a contract of sale. However, if you are a tenant in a leased pub, it is essential to get the landlord's written consent before the sale so that you won’t have any hiccups assigning the lease when the sale is complete.

The next step in the transaction is the investigatory phase. Here, you may want to think about the best way to present and sequence the way that you disclose information so that you can present your pub in the best possible light.

An important agreement that sets out the expectations of both you and the buyer and may or may not be legally binding, depending on its wording, is The Memorandum of Sale document (which may also be referred to as a Heads of Terms).

Other items on the to-do list include arranging removals and retraining staff. You should be familiar with the legal requirements under TUPE (Transfer of Undertakings Protection of Employment) for regulations for employees so that you are not caught off-guard at this stage.

Business Valuation, How Much is Your Pub Worth?

Deciding exactly when to sell up is seldom clear-cut. Nevertheless, when the time comes to finding out the true value of a public house, some things to consider are location, market fluctuations and consumer trends.

Potential buyers will want to know information like how many covers your pub serves and how much of your revenue is generated through drink as opposed to food.

Finalising the right price tag, therefore, requires specific knowledge of the sector and making sure that you have an asking price at the right level will be important to attract buyers.

To find out the right price for your pub, ask an accountant with experience in the licensed trade about recent sale prices for other pubs in the area. An accountant could also:

  • Provide a guide when setting the correct sale price, including fixtures and fittings.
  • Value accumulated goodwill, an intangible yet significant asset.
  • Assure the buyer of the correct status of the pub’s accounts.
  • Report on the strengths and challenges of individual businesses.
  • Check and confirm ongoing maintenance costs.
  • Explore the freehold or tenancy status of the pub: tied or non-tied (in respect to the brewery).
  • Ease the sale.

Due Diligence when Selling Your Pub

During due diligence, the person that is looking to buy your pub will want to get to grips with exactly what it is that they are buying.

As the seller, you may want to work with a legal advisor to see how you can best package your pub. You have to disclose everything to potential buyers, but the process can be managed so that you can stand up under scrutiny.

If you can, release confidential commercial information only at the later stages when you think that a buyer is committed. Full disclosure is required, but commercial solicitors can manage situations in a way that will, hopefully, be to your advantage.

Keep in mind what it is about your pub that you want to come across to the buyer and make sure that you communicate this well. This type of knowledge will help the buyer to understand whether this is the correct pub for them.

Throughout this process remember to be honest. If you lose the trust of the buyer, you might cause the sale to fall through or there could be legal action in the future.

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How to Negotiate the Sale of Your Pub

If you want to sell your pub, the first step is to attract a suitable buyer. Leased pubs are common and, in order to sell, it helps to anticipate the type of buyer that will be interested in your particular pub and focus the advertising and marketing that will attract them. What is it that makes your pub special?

When you are negotiating a sale the key is to make sure that both parties are happy. There are a lot of pros for potential buyers who are looking to run their own establishment, make it their own and succeed in the licensed trade and your pub will hopefully be the way that they do this.

In the case of a tied brewery, the company (or pubco) will also want to meet the purchaser and they will want to know whether the buyer is serious or not. Having information on hand like the financial status and affordability checks can help prevent time from being wasted.

Consider if You Need a Business Broker When Selling Your Pub

For publicans who have decided to move on, enlisting the services of the right professional who is familiar with the licensed trade, drawing up sale agreements, handling employment issues and reviewing contract warranties could help to smooth the sale and help to avoid possible complications.

There are other factors to consider, though, as a broker can be costly to hire and there is no guarantee that every broker will have the expertise that are needed for the sale of your particular pub. It may be better for you to consider an independent sale.

It is important to do a lot of research and spend time getting to know the industry so that you can decide what it is that you need to successfully sell your pub.

Find out everything you need to know about selling your business!



Anthea Taylor

About the author

Anthea Taylor is Assistant Editor at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

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