Artisan Spirit: Spring 2022

Page 80

Written by ALEXIS MASON and LAUREN VOKE

Regulatory Considerations and Plausible Implications

MERGING WITH OR ACQUIRING A BUSINESS IN THE ALCOHOL INDUSTRY New market entrants may not be familiar with the complex regulatory framework that surrounds the alcohol beverage industry and potential limitations on future business endeavors.

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here has been an increase in mergers and acquisitions activity (M&A) in the alcohol beverage industry in recent years. These transactions have resulted in the entry of various new players into the alcohol beverage industry, such as private equity investors and non-alcohol beverage companies. New market entrants may not be familiar with the complex regulatory framework that surrounds the alcohol beverage industry and potential limitations on future business endeavors. Private equity investors are typically highly diversified, so investing in a business that involves the sale of alcohol may be a relatively new pursuit that might represent a fraction of their overall interests. However, private equity investors should be aware of the implications of having an ownership interest in a business that sells alcohol. When considering merging with or acquiring a business involved in alcohol sales, it is crucial to have a full understanding of the cross-tier considerations and pre- and post-close licensure and qualification requirements imposed on this heavily regulated industry. This article will touch on such nuanced aspects of the alcohol industry regulations that frequently affect prospective transactions by new market entrants.

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