Looking for a sparkling way to uncork the new millennium? Consider this Texas-based liquor retailer and wholesaler. Profile includes price, how the business was valued, outlook of prospects, and pros and cons.
The Business: Worried that the boom in the U.S. economy could fizzle even as the new millennium is uncorked? Then savor the bouquet of a business that's sure to make every year a vintage year: a purveyor of distilled spirits, wine, and beer based in one of Texas's fastest-growing counties. Although this large company is 15 years old, its sales have increased by nearly 70% since 1996, when the owner decided to diversify into wholesale liquor distribution to local restaurants. Three retail outlets and a 4,600-square-foot warehouse are leased, but the sale includes some pricey assets. The new owner would get nearly $1 million worth of (liquid) inventory and more than $500,000 worth of equipment, including three industrial-size coolers and a state-of-the-art computer system that updates inventory and sales daily. One caveat: The buyer will have to ante up $1,000 for three new licenses because the seller's licenses, in accordance with state law, do not transfer automatically with the sale. The current owner is retiring for health reasons, but his three store managers and most of the other 18 employees should be willing to keep this party hearty.
Price: $3.75 million
Outlook: This company's prospects look as rosy as, well, a tequila sunrise. That's because its potential customer base is growing as fast as the county in which it does business (and according to the most recent U.S. statistics, each year the average adult consumes roughly 2 gallons of distilled spirits, 32 gallons of beer, and 3 gallons of wine). Thanks to Texas's somewhat quirky licensing regulations, this retailer/wholesaler can sell its libations anywhere but ship them only within city limits. While that restriction leaves the prospects for Internet sales high and dry, it doesn't dampen the outlook for local sales growth, since residents of nearby "dry" or "partially dry" cities are generally willing to handle their own pickups. The best way a new owner could spike this sales brew? Intensify the marketing effort of the company's wholesale business, which now serves about 80 accounts.
Price Rationale: Although this deal may be a bit pricey for some shoppers' tastes, it's valued fairly according to current standards, which call for liquor stores to sell for three to five times monthly sales (which are about $570,000), plus the value of inventory (about $1 million) and the liquor license in states where it's transferable (which doesn't apply in this case). That suggests a price range of about $2.7 million to $3.8 million, with the sale probably closing at the higher end, since the wholesale business, although it brings in lower margins, has growth potential.
Pros: Although liquor-consumption rates aren't growing, this company's customer base is. Toast that!
Cons: You'll wind up with a severe hangover if your wholesale business doesn't grow fast enough to justify a bar tab this big. -- Jill Andresky Fraser
*Before interest, taxes, depreciation, and owner's compensation.
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Eric White, Empire Business Brokers, at 972-378-6999.