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Buying A Liquor Store - When Do I Perform The Inventory Count?

Comments & Replies: 7 Views: 17303 Posted By: Peter Siegel MBA

The only time to get an exact and accurate inventory count, and valuation, is at the time the business is being transferred. To do so beforehand, would mean that any merchandise sold after inventory is taken, but before close of escrow - Peter Siegel, MBA with BizBen & others discuss this topic.

Topics: Buying A Business, Escrow Closing Issues Tags: buying a business, escrow bulk sales, inventory

Contributor: Peter Siegel MBA: BizBen Founder, Lead Advisor

The only time to get an exact and accurate inventory count, and valuation, is at the time the business is being transferred.

To do so beforehand, would mean that any merchandise sold after inventory is taken, but before close of escrow - assuming the store remains open and some merchandise is sold before the deal is finalized - would enable the seller to collect the proceeds from any merchandise sales as well as receiving the wholesale value of that merchandise, even though it no longer is part of inventory and cannot be transferred to the buyer.

As an example, if a bottle of scotch whiskey is counted during inventory, and included in that count when inventory value is made part of the escrow, but actually was sold while the escrow was being conducted, the buyer will have paid for it, but won't have it on the shelf to sell when he or she assumes ownership.

Typically, the store is closed for the inventory count to avoid this problem. Alternatively, the store can remain open while escrow is conducted, with the store clerks making careful note regarding the sale of each item, so the inventory count can be adjusted to allow for what was sold.

Contributor: Business Appraisals, Valuations Advisor

After business hours or on slow days. I know that is hard to do with your business but those are the best times.

Contributor: Helen Yoo, Escrow Services: Southern CA

From the past transactions, we usually see the buyer and seller perform inventory count within 48 hours from close of escrow or at least a day before the close of escrow. In the opening escrow, buyer and seller usually agree on a rough estimate of the inventory amount and once parties complete the inventory count, then the escrow holder is notified of the exact figures so it can be incorporated into the escrow closing documents.

Contributor: Business Broker, SF Bay Area

Usually I recommend doing the Inventory the night before Close of Escrow. Then next morning you can take the Inventory information to Escrow to have them update the final price based on the actual inventory. There are Inventory services who will do the Inventory lot faster than you would do it on your own. If the Seller keeps the cost information handy that speeds up the process. Otherwise you can use the retail value divided by the normal markup for that kind of an item to arrive at the cost. If there will be a gap between when the Inventory is done and the date for close of escrow, then have Seller keep track of the sales during the interim period and then reduce the Inventory count by what Seller sold during that period. Usually Seller can arrange not to purchase any new inventory during those few days.

Contributor: Janet Carrera, Escrow Services

Usually the inventory is done the night before closing - buyer/seller can do inventory together OR there are companies out there that will do it for you.

Contributor: Rick Carlson, Business Broker - Southern CA

I would assume you did a cursory inventory assessment prior to entering into any contract to purchase as a start. We always try to do a final inventory the night (ideally after hours) or day before closing and then all proceeds (upward or downward) are adjusted by escrow. This way "you get what you pay for" and there's no shenanigans.

Helpful Resources To Assist In Selling And Buying California Businesses

Timothy Cunha JD, Business Broker: SF Bay Area

SF Bay Area experienced attorney, & business broker. I & my EvergreenGold team offer owners sound advice & expertise to build business value & achieve profitable sales. For a FREE business evaluation & SWOT analysis for your business call me direct at 650-600-3751, 650-866-5393 Text.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Manjit Singh, Business Broker - SF Bay Area, Central Valley

Assistance in the SF Bay Area & Valley. Contact me about buying or selling a restaurant, liquor store, gas stations, markets, and c-store businesses. If you are looking to buy or sell a SF Bay Area, Central Valley liquor store, market, c-store, restaurant, etc phone me direct at 510-417-9429 Cell.

Ryan Clark, Business Broker: Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Jack Oh, Business Broker: Southern California

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989 Cell / Text.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

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