Introduction
When craft brewery owners consider selling—or when buyers evaluate an acquisition—one financial metric quickly becomes central to the conversation: EBITDA. Understanding how EBITDA is calculated and how it impacts valuation is essential for knowing what your brewery is truly worth.
What Is EBITDA in a Craft Brewery?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. In the craft brewery industry, EBITDA is widely used because it isolates operating performance from financing decisions, tax structure, and non-cash expenses.
Buyers rely on EBITDA to compare breweries of different sizes and to assess sustainable profitability.
How Craft Breweries Are Valued Using EBITDA
Most craft breweries are valued using an EBITDA multiple:
Enterprise Value = EBITDA × Multiple
While the formula is simple, the valuation outcome depends heavily on:
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The quality of EBITDA
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How it is normalized
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The risk profile of the brewery
Normalized EBITDA: What Buyers Actually Use
Buyers focus on normalized EBITDA, not reported EBITDA. Normalization adjusts for expenses or income that won’t continue after a sale.
Common craft brewery EBITDA adjustments include:
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Owner compensation above or below market rates
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Personal expenses run through the business
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One-time legal, consulting, or expansion costs
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Non-recurring or abnormal events
Even modest EBITDA adjustments can materially change valuation.
What Drives EBITDA Multiples in the Craft Brewery Industry?
EBITDA multiples vary widely based on risk and growth potential. Key drivers include:
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Consistency and size of EBITDA
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Brand strength and local market position
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Taproom vs. wholesale distribution mix
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Growth opportunities and scalability
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Quality of financial reporting and management
Lower-risk, well-documented breweries typically command stronger multiples.
EBITDA vs. Cash Flow
EBITDA is not the same as cash flow. Buyers also evaluate:
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Capital expenditure requirements
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Working capital needs
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Debt, leases, and equipment condition
Two breweries with similar EBITDA can have very different values once these factors are considered.
Final Thoughts
Valuation is more than a formula. Clean financials, properly normalized EBITDA, and a clear operating story can significantly impact outcomes—especially in today’s competitive craft beer market.
At American Craft Brewery Advisors, we help brewery owners understand what truly drives value before going to market.
If you’re considering a sale or simply want to understand your brewery’s value, start with EBITDA clarity.