The brewery owner I am picturing built his place over six years. He started in a corner of a warehouse on the north side of Jacksonville, took his savings and a second mortgage and built out four fermenters, then ten, then twenty. He has eighteen tap accounts in three counties, a tasting room that does Friday-night flights and Sunday brunch flights, and a distribution agreement he signed in year two that he has not opened the file on since. He is forty-one. He is tired. A bigger regional brewery, looking to expand into northeast Florida, has just sent him an LOI for $4.3 million.
If you are that owner, the LOI is not the document that will decide your deal. The Florida Division of Alcoholic Beverages and Tobacco is. So is the distributor your brewery sells through. So is a clause buried on page nine of a contract you have not read in four years. This is the post I would want you to read before you sign back.
The license is not assignable, and the timeline is the license
Every craft brewery in Florida operates under a manufacturer’s license issued under Chapter 561 of the Florida Statutes. Most have a CMB (consumption-on-premises malt beverage) license stacked on top so the tasting room can pour. Both licenses are personal to the licensed entity. Neither moves when the asset purchase agreement signs. The buyer has to file for a new license, or for an officer/owner amendment if the buyer is acquiring the entity itself.
That timeline drives your closing date in a way founders do not see at the LOI. A new manufacturer’s license in Florida runs sixty to ninety days from a complete application to issuance, longer if the local zoning sign-off is contested. An officer change on an existing license runs thirty to sixty days. If your buyer plans to close on the asset purchase agreement, then operate under the seller’s license for ninety days while waiting for theirs, that is a violation of the statute and the seller’s license can be suspended retroactively for permitting an unlicensed operator to run the brewery on their license.
What that means in practice is one of three deal structures. Either the buyer waits for their license to issue before the asset sale closes — which means the LOI exclusivity period has to be long enough to absorb that wait. Or the parties structure the transaction as a stock or membership-interest sale, where the entity (and its license) does not change, only the ownership of the entity does, and the license amendment is the equity holder change form rather than a new license application. Or, in a smaller subset of deals, a management-services agreement bridges the gap, with the buyer effectively operating the business under a contractual arrangement while the seller’s licensed entity continues to hold the license on paper. That third structure is the most likely to draw a regulator’s attention, and I rarely recommend it for that reason.
If you are signing the LOI, the right move is to push for an equity deal precisely because of this. Tax considerations sometimes pull you the other way — a step-up in basis is real money for a buyer — but the operational continuity of the license usually wins. Make the LOI conditional on completing due diligence on whether an equity deal is workable, and put the license-transfer timeline on the critical path right next to financing.
The tied-house rules will outlast both of us
Florida is a three-tier state. Manufacturers cannot own distributors, distributors cannot own retailers, and the tied-house provisions of Chapter 561 are enforced with surprising vigor by DABT. If your buyer has any interest, direct or indirect, in any Florida distributor or any tap account, the acquisition is dead before the diligence room opens. That includes minority equity, that includes a private-equity sponsor whose other portfolio company is a distributor in a different state, and that includes lenders who have warrants convertible into distributor equity.
This is not a footnote. The biggest deal-breakers I have seen in brewery M&A are not financial. They are structural cross-ownership conflicts the buyer’s sponsor did not surface in the LOI because nobody on the deal team thought to ask. The smart practice on the seller side is to put a representation in the LOI itself — before exclusivity — that the buyer and every member of the buyer’s ownership chain is independent of any Florida-licensed distributor or retailer. If they cannot make the rep, you know in week one rather than week ten.
The distribution contract is the second-most-important document
Most Florida craft breweries sell through a wholesale distributor under a contract that was probably drafted by the distributor and signed by the founder in a hurry. Open it. Two clauses matter.
The first is the territory and termination clause. Florida law gives wholesalers strong franchise-style protection — once a manufacturer designates a wholesaler for a brand in a territory, the manufacturer cannot terminate or change distributors without good cause and the burden is on the manufacturer to prove it. That means your distributor has an effective veto over a sale that involves shifting the brand to a different wholesaler. If your buyer plans to consolidate distribution under their existing wholesaler, the terminations and territory swaps run through the distributor’s lawyer. Expect a payment, expect a fight, and expect those costs to show up in the LOI as a price reduction or in the merger agreement as an indemnification carve-out.
The second clause is the change-of-control consent. Most Florida craft distribution agreements include one — sometimes buried — that requires the distributor’s consent to any sale or change of control of the manufacturer. That is the lever the distributor pulls when it wants a piece of the deal. The negotiated amount is rarely zero. Plan for it. If the distributor is sophisticated, plan for a number with five or six digits before the deal even gets to closing.
The tasting room is a different business than the brewery
A 2026 craft brewery in Florida is often two businesses on one set of books. The wholesale side sells to distributors and accounts. The tasting room is a retail food-and-beverage business with hours, staff, a POS system, food sales, sometimes live music. Buyers buying the wholesale brand sometimes do not want the tasting room, or do not want it as currently operated. That cleaves your deal.
If your buyer is a regional brewery buying you for the brand and the distribution footprint, they may keep the tasting room as a brand outpost but not pay much for it. If your buyer is a private-equity-backed roll-up, they may want the tasting room because hospitality margins are real, but they will price it on a different multiple than the wholesale book. If you have not separated the two sets of numbers — the wholesale P&L from the tasting-room P&L — before the LOI, the buyer’s Q-of-E provider will do it for you, and they will allocate every shared cost in the way most favorable to the buyer.
The work to do before signing is to produce a clean two-segment income statement: brewery wholesale (revenue, COGS, distribution costs, taxes, allocated overhead) and tasting-room retail (revenue, food cost, labor, occupancy, allocated overhead). The Q-of-E will reconcile. But starting with your own segmented view changes the negotiation.
The lease, the tanks, and the brand IP
Three smaller items that swing more value than buyers expect.
First, the lease. Most craft breweries lease their building. Most leases have an assignment-or-change-of-control consent. The landlord is sometimes the largest single hold-up in a brewery deal because the landlord knows you can’t move the brewery — twenty thousand pounds of stainless steel does not relocate cheaply — and they price the consent accordingly. If you anticipate a sale within twelve months, the time to renegotiate the assignment clause is before the LOI lands, not after.
Second, the brewing equipment. Tanks, fermenters, the canning line — these are often financed under equipment loans or capital leases. The financing party’s consent to the asset transfer is often required and is often a meaningful negotiation. Asset deals in particular get tangled here because the buyer needs the lender to release the security interest, sometimes in exchange for paying off the equipment loan at closing, which reduces your wire.
Third, the brand IP. Trademarks for the beer names, for the brewery name, for the logo. Most breweries have at least registered the brewery name federally, but the can artwork, the beer names, the tap-handle designs are sometimes thinly protected. A buyer will want a clean IP rep with the kind of representation an IP lawyer drafts after a search, not a clearance done by the founder over a weekend. Get the search done before the data room opens. Anything you find now is something you fix in due diligence; anything you find later is a price reduction.
Earnouts in brewery deals are different
If the buyer is paying part of the purchase price as an earnout, the brewery context is different from most M&A. Volume targets are the obvious metric, but Florida craft brewery volume is hostage to the distributor, to weather, to the local economy, to a single account that goes under, to a hurricane. Building an earnout on barrel count without specific operating covenants is asking for a fight at year two.
What I push for instead is either a milestone-based earnout (a specific new tap-account count, a specific market expansion completion, a specific brand-launch in a new SKU) or a contracted operating-covenant earnout (the buyer agrees to maintain certain marketing spend, certain account-management staffing, certain distributor relationships). The reasoning is the same as my general seller-side note on earnouts — “commercially reasonable efforts” is the four-word phrase that pays plaintiffs’ lawyers a lot of money. Specific covenants pay you.
Two things to do this week if you are thinking about selling
If you are the brewery owner I started this post with, two things to do this week. First, pull the distribution contract and read it carefully — the territory clause, the termination clause, the change-of-control clause. Talk to a Florida alcoholic beverage lawyer about what the lever looks like in practice before you sign back the LOI. Second, talk to your CPA about whether you want an equity deal or an asset deal, and what the basis step-up math looks like — because that decision is going to be on the table within two weeks of signing the LOI, and the right answer changes the price the buyer will pay by hundreds of thousands of dollars.
The broader M&A context lives on our M&A page. If you are a brewery owner with an LOI in front of you, or a buyer trying to figure out how the license transfer interacts with your financing, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
