Facilitating the purchase & sale of businesses with alcohol permits

Buying a Business with a TABC Permit

Buying a Business with a TABC Permit Purchasing a business in a regulated industry requires important due diligence and compliance considerations.  They include but are not limited to –
  1. How is the existing business structured, e.g. sole proprietorship or a business entity? [LINK TO STRUCTURE SUBPAGE]
    2.  
  2. Has the seller provided a tax clearance letter? Failure to obtain same may result in the purchaser having successor liability with the Texas Comptroller of Public Accounts.  See, Tex. Tax. Code § 111.020.
    3.  
  3. Is the seller’s current ownership and control reflected in the TABC’s AIMS system?  Out of date records may be a red flag.
    4.  
    1. Is continuity of sales, service and delivery of alcohol required following the sale of the business? If so –
      2.  
    2. Does the buyer intend to apply for their own permit?
      3.  
    3. Do the parties intend an equity purchase, e.g. stock purchase, membership interest purchase, etc., and the buyer to be involved in operations during the interim period?
     
  4. Do the parties intend an asset only purchase, and the seller continues to operate during the interim period?
    5.   Some of the scenarios may need a management or sublease agreement. [LINK TO CONCESSION AND MANAGEMENT AGREEMENT SUBPAGE]   Failing to comply could result in cancellation of the existing permit, disqualification from holding a permit, and possible criminal charges.  See, e.g., Tex. Alco. Bev. Code §§ 11.05, 61.16, 61.71(a)(14), 101.76(a) and 109.53.     
  5. Is the buyer, including officers, directors, shareholders, or investors ineligible or disqualified from holding a permit because of criminal history, having a direct or indirect interest in another tier, or some other prohibited interest?  See, Tex. Alco. Bev. Code §§ 11.46, 22.06, 24.05, 102 et seq.  For example, a CEO of alcohol retail establishment such as a bar, cannot hold an interest in a winery.
    6.  
  6. Is the existing permit or license subject to any unadjudicated TABC protest or disciplinary matter, or is experiencing some unusual hold up in the renewal process?  See, Tex. Alco. Bev. Code §§ 11.43, 11.431, 11.432, 11.44, and 11.61.
    7.  
  7. Is the existing permit or license subject to any pending TABC investigations or civil legal claims, e.g. dram shop, premises liability, etc.?
    8.  
  8. Is the existing permit a Mixed Beverage Permit or other type of permit?  Some changes have to be reported before the equity purchase, whereas others have to be reported within 30 days of closing.  See, Tex. Alco. Bev. Code § 28.04 and 16 Tex. Admin. Code § 33.94.
  Because of the complex rules and regulations and the consequences for failing to comply, it is very important that you have an experienced liquor license attorney who is licensed in the State of Texas.

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