M&A and Alcohol: Don't Let Regulatory Red Tape Leave Your Deal With a Hangover
Arielle Albert and Brian Fink highlight some important considerations and legal obstacles that investors face when buying and selling businesses with interests in alcohol licenses.
December 08, 2021 at 12:00 PM
10 minute read
In the world of mergers and acquisitions, target businesses are often a complex mix of different enterprises. Those who regularly practice in this area create "due diligence" procedures in order to make certain they do not run afoul of the many legal landmines buried inches below the surface. When a target business is involved in any portion of the hospitality industry, these dangers increase exponentially.
Though beverage alcoholic licensing issues may spring to mind if the key enterprise involves a manufacturer, wholesaler, retail bar or liquor store, similar issues will arise in many other businesses, such as hotels, resorts, restaurants, logistics companies, entertainment venues, supermarkets, gas stations, and the list goes on. Failure to comply with beverage alcohol regulations could jeopardize key assets that makes the target so valuable: its beverage alcohol licenses.
The chances for error are numerous and can occur at various points in the deal. At the outset, in the due diligence phase, Buyer's attorney may fail to uncover past violations or other liabilities related to beverage alcohol laws.
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