Technical due diligence when taking over a running brewpub

Why you need a technical review

A brewpub sale usually comes with financial statements, a lease and a list of equipment. None of these tell you whether the glycol chiller is about to fail, whether the fermenters have cracked welds or whether the beer has been quietly getting worse for a year. Those problems become yours on the day you sign.

A technical review sits alongside legal and financial due diligence. It looks at the brewery as a working plant: equipment, utilities, quality, people and paperwork. Our guide to what a brewery health check covers describes a similar process for existing owners.

Equipment and utilities

• Inspect every vessel inside and out for weld quality, corrosion, dents and the condition of jackets and insulation.
• Check valves, gaskets, pumps and hoses for wear and leaks.
• Test the glycol chiller under load and ask its age and service history.
• Check the boiler or steam system and its inspection status under current state rules.
• Review the water supply, treatment system and recent water tests.
• Look at the electrical panel, compressor and CO2 supply.
• Ask for maintenance records. A brewery without them has probably not been maintained. Our guide to a preventive maintenance plan shows what good records look like.

Beer and quality records

Taste every beer on tap and from tank. Ask for brew logs, fermentation records, specifications and any lab results for the last year. Look at batch consistency, dumped batches and customer complaints. Check how yeast is managed and whether the house strain can be continued. A brewery whose beer depends on one brewer's memory carries a risk that leaves with that brewer.

Buy a fresh glass of each beer as an ordinary guest before revealing your interest, if you can. It shows how the beer reaches customers on an ordinary day, which a seller-arranged tasting may not.

Then look at the cellar records for the beers that sell best. If those beers vary widely from batch to batch, the brand you are buying is weaker than the sales figures suggest. Consistent records are a good sign. Missing records are a warning.

Losses and costs

Compare malt and hop purchases with beer sold over the same period. A large gap means losses somewhere between brewhouse and glass. A brewery loss audit can locate them. Review utility bills, chemical use and the cost per litre the seller reports. Numbers that look too good often turn out to leave things out.

Licences, approvals and compliance

Licences may or may not transfer to a new owner, depending on the state and the type of licence. Excise registers, label approvals and the pollution control board consent to operate all need checking. Rules vary by state and change over time, so work with a licensing adviser and a lawyer on this part. Never assume a licence goes with the premises.

Also check the lease: its remaining term, whether the landlord must consent to the transfer and who owns fixed equipment at the end of it.

People and recipes

Find out who brews the beer and whether they are staying. Check whether recipes and SOPs exist in writing and whether the sale includes them. If the head brewer is leaving, plan a handover period as part of the deal. Talk to the team. Staff often know about problems the owner has not mentioned.

Turning findings into a decision

A good review ends with a written report: what is in good order, what needs fixing soon and what it might cost to fix, what is unknown and what is a deal-breaker. That report supports price negotiation and helps you plan the first months after takeover. Some findings justify a lower price. Others justify walking away. In consulting work we often see buyers discover after signing what a few days of checking would have shown before.

Plan the first hundred days after takeover from the same report. Fix safety issues first, then anything that threatens beer quality, then efficiency and cost. Keep the existing beers steady while you learn the brewery, even if you plan to change the range later. Regulars are part of what you bought. They notice changes before anyone else does.

Keep the due diligence report. It becomes the baseline against which you measure every improvement you make.

Common questions

How long does technical due diligence take?

For a small brewpub, a few days on site plus time reviewing records is common. More if records are poor or equipment needs specialist inspection.

Do brewpub licences transfer to a new owner?

It depends on the state and the type of licence. The rules also change. Work with a licensing adviser and lawyer before assuming anything.

What is the most common surprise in brewpub takeovers?

Equipment that has not been maintained and beer that depends on one person's undocumented knowledge are both common. Neither shows up in financial statements.