Preparing to Sell Your Alcohol Business — Part III: Distribution
This series of articles addresses how your alcohol business can prepare for sale by addressing alcohol regulatory compliance issues and preparing organized information that will assist potential buyers during the due diligence phase. The first article, on licensing, can be found here, and the second article, on labeling, is here. This article addresses issues surrounding distribution relationships, which are relevant to alcohol producers or importers that are preparing for sale.
Part III: Distribution
If you are a producer or an importer, it is critical to prepare comprehensive information relating to your Distribution Network. You should have a chart of your network, setting out which distributors you work with, in which territories. If you have multiple brands, this chart should designate whether all your brands are assigned to a single distributor in each territory, or if you work with multiple distributors. This chart should note whether you have any Written Agreements with your distributors. You should also collect these agreements for review by potential purchasers of your business. Historical information on your business’s relationship with each distributor is also valuable to compile. This information will be critical for potential buyers to assess to what extent your distribution network aligns with their own, and whether any distributor realignment is necessary post-close. In addition to the review of any contracts, the potential buyer’s alcohol attorney will need to evaluate any distributor realignment plans for Franchise Law issues relating to distributor termination.
Potential buyers will also want to know more about any pricing or promotional programs. They will want to learn how your brands are connecting with retail buyers, and whether these programs and relationships can be maintained post-close. The level of detail each potential buyer may request will vary, but you should anticipate being asked about pricing strategy, such as any Quantity Discount or Channel Pricing programs. You should also expect questions into consumer promotions, such as Coupons. If any of your products are Allocated via wholesale distribution, you should expect questions regarding how such allocation decisions are made. Buyers are also likely to request information on any Private or Control Label programs you have with retailers. As you collect and prepare materials, take time to work with your regulatory attorney to issue spot and correct potential compliance issues.
One of the primary purposes of due diligence is for buyers to assess your alcohol business’s regulatory compliance and potential risks. However, at this stage of due diligence, a buyer is equally concerned with determining compatibility. Can they incorporate your brands or business into their existing business, operations, and practices, or will significant changes be needed post-close? Would any changes be costly to implement, or detrimentally affect sales of your brands or their existing brands? As a seller, preparing this information in advance can help prevent both parties from spending time on a transaction that may be a mismatch in terms of compatibility.
September 8, 2026
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