The traditional British pub can be a great investment, but selling any business can be a long and complex process, to sell your pub is no different.
Whether you’re selling a leasehold pub or a freehold pub, you’ll have to work hard to find the right buyer who has the business interests at heart. From country pubs to city drinking dens, the majority of public house properties have the potential to be very profitable.
Whether you’re looking for a quick sale or want to increase the value of your pub business, here are some steps to follow to increase its saleability and seal the deal.
1. Prepare to sell your pub: Clear accounts and have key paperwork to hand
Buyers like to see a breakdown of a pub’s turnover to see how it is run and if there are any profitable opportunities. In addition to official accounts it’s a good idea to split the turnover into food sales, wet sales and accommodation if appropriate. Don’t forget that buyers may want to change the direction of the pub and this could give them a better idea of what is and isn’t successful.
It is a good idea to make sure you have a minimum of three years’ worth of accounts to hand for buyers to determine if it lives up to its valuation. An experienced business broker, such as ourselves, will only release accounts to buyers who have positively viewed the business. For more information on getting your accounts in order, take a look at our in-depth guide about how to sell your business.
Having key paperwork to hand, such as VAT returns, tax returns, licence details, asset lists and supplier details will help you save time in the long run when buyers are likely to ask for these. Make sure you have a copy of any relevant documentation about the freehold or lease to hand as well as any floor plans and title plans.
2. Get a business valuation
You can work out the value of your pub yourself through calculating your EBITDA multiple or asset value, but you can often undervalue yourself or forget certain assets that can bump up your value. There are quick forms you can fill in online to get a rough estimate, but getting a proper business valuation can lay the groundwork for a great deal with potential buyers.
During a valuation, business brokers will come for a tour of the pub, take a look at your trading figures and give you an accurate estimation for how much you could sell for, as well as guiding you through potential next steps should you choose to use their services.
3. Prove you have a loyal customer base
A significant loyal customer base can be a great business tool, and showing potential buyers that they will always have the local clientele (and a reliable revenue) can make the pub very attractive indeed. A pub is often the hub of a community, which means it naturally has some regular customers who prop up the bar. Most pubs will have a few regulars, but work hard to get more and ask the regulars to bring in their family and friends.
Digital proof can also help here. This could be by asking your customers to give online reviews if they haven’t already, creating social media posts asking them to share their favourite memories of your pub in the comments, etc.
One example we’ve seen recently is where one of Bolton’s pubs, which had a really strong customer base and community, was forced to close. Since this community would struggle to find a similar atmosphere elsewhere, some of their customers got together and wrote a thoughtful open letter about what the pub meant to them over the years. It is looking to reopen under new management, which just proves the power of a loyal customer base!
4. Don’t forget the value of your knowledgeable and skilled hospitality staff
If you have a strong team that runs the business well and takes care of the regulars, then this is another key asset to the sale. Some buyers may not want to run the business themselves, they might plan on hiring a manager. Having good staff already in place can increase the saleability of any business, but especially a pub.
It’s a good idea to gather your employee’s details together early on as you will need to provide this information to the new owners during the handover period. This includes information such as a full list of employees, their contact details, their job titles, salary, age, contract length and any other relevant information.
It’s also worth noting that the earlier you train your employees to do some of the key things you do and slowly reduce your responsibilities towards the day you sell, the better off you will be as you have the knowledge that your role has been dispersed into good hands. Noting down key processes here will be useful for the handover process.
Are you ready to sell your pub?
5. Identify your Unique Selling Point and use it in your marketing plan
No two pubs are the same, and there are many reasons why customers choose yours. Identify the pub’s USPs and shout about them! Whether it’s the best Sunday roast in town, fantastic weekly entertainment or an excellent back bar stocked with premium spirits, tell buyers why people travel far and wide to visit your welcoming pub or bar. Using quotes from online reviews here can also pack a punch – testimonials are powerful!
People love stories. Try to tell the story of how you built the business from the ground up and why you wanted to set it up. What caused that burning passion inside you that made you want to start this venture in the first place? Have you created a pub with such a niche atmosphere that your regulars would struggle to find something similar elsewhere? Make sure you emphasise this in your marketing.
6. Effective marketing
It’s important to pinpoint the prospective buyers your pub may attract, and start marketing the business to them. Young pub landlords, first time business buyers and retired pub owners are all different types of buyers who are buying for different reasons. Put yourself in the headspace of your ideal buyer. Why would they want to choose your pub compared to others? Having your USP pinpointed as mentioned above will really help with this.
Once you’ve worked out what type of person will be willing to invest in your pub, you can create an effective marketing plan. Advertise using a range of communication channels, with the help of an experienced business broker.
7. Always keep the pub polished
Take time to take care of the property and make sure the pub always looks its best. It goes without saying that potential buyers are going to turn up unannounced to check out the pub at any time of day, to sit back and get a feel for the atmosphere as a customer. Always be polished and ready.
This goes for marketing too – hiring a professional photographer when you’ve given the place a good clean will increase your chances of interested buyers. People want to see that your pub is well looked after on your online listing.
8. Follow house rules
Many pubs come with owner accommodation, and it’s important you pay as much attention to selling this as you do to sell your pub – it is part of the same building after all.
Apply the same rules as when selling a house: make sure there is minimum clutter, as much natural light as possible and make it a blank canvas for the buyers to use their imagination. Some fresh paint and small appliance upgrades can go a long way, as unattractive accommodation can put some buyers off. Perhaps hiring someone to do a deep clean of the place would help here too.
9. Pick the buyer and finalise the deal
Once you’ve picked a buyer that you truly feel will take your pub to the next level, it’s time to finalise the deal. This involves the buyer undertaking due diligence to ensure everything you promised will be delivered as well as double checking the specifics such as legal, financial and commercial aspects of your business, including accounts, IP protection, tax compliance and more.
10. Now it’s time to hand over
Now it’s time to hand over to the new buyers. This can include information such as staff details, customer information, key processes, accounts, an inventory, and more. Be on hand as much as you can during this time to answer any final questions that may crop up. The buyer will then sign a final contract of sale, and then the process is complete!
