What Buyers Look for in a Tattoo Shop

Who is behind the chairs

The first question is how the shop is built. In some shops the owner employs the artists and keeps a share of each tattoo. In many more the artists rent a booth or a chair and keep what they earn, paying the shop a weekly or monthly fee. A buyer will price these two models differently, because the income is different. Booth rent is steady and easy to forecast. A split on every tattoo moves with the calendar, and it also leaves the shop exposed if a popular artist leaves.

Whichever model you use, the buyer wants a list of the artists with their start dates, what each pays or earns, and a sense of how booked each one is. Artists with waitlists of several months are the strongest asset a shop can show. A shop where the owner is the only artist people ask for will be viewed as a job, and the price will reflect how much of the calendar can run without that person. Our post on owner dependency covers how to move the work off yourself.

Buyers also ask how the artists are classified, as employees or independent contractors. Rules vary by state, and your attorney confirms what applies. A buyer's lawyer will look at it, and a shop that has been careless can find the question costs money at the table.

What makes a shop worth more

A shop with a name that people know, a steady stream of walk-ins and a calendar that fills through consultations is worth more than one that depends on a single artist's following. Review sites and social media accounts count here, and it is worth checking who owns the account logins. If an artist set up the shop's page under a personal email, a buyer will want that fixed before closing.

Artwork needs thought as well. Custom designs belong to the artist who drew them unless a written agreement says otherwise, so the shop's flash collection, wall art and portfolio images may not transfer the way an owner assumes. A buyer may ask for signed agreements that let the shop keep using images and designs. Clean files make that easy.

A second revenue line helps. Piercing, jewelry sales, aftercare products and merchandise add income that does not depend on an artist's hours. Buyers look at these lines separately and ask what share they make up.

Seasonality is a normal part of the trade. Many shops do well around holidays, convention weekends and summer, and slow in the winter. Show the months so a buyer sees the pattern.

Sterilization, licensing and records

A tattoo shop has more health-related paperwork than most owners expect a buyer to care about, and buyers care a great deal. The shop typically holds a business license and a health permit from the local or state authority, and artists hold their own credentials and bloodborne pathogen training. A buyer will ask to see them all, and they will ask which ones transfer. Some stay with the location, some stay with the person and some have to be applied for again after the sale. Your attorney confirms what applies.

Expect questions about the autoclave and how it is tested. Spore test logs, maintenance records on the sterilizer, a contract with a sharps disposal company, and a clear routine for single use needles and ink caps all show a buyer the shop is run properly. Missing logs raise the worry that something has been skipped.

Client paperwork matters too. Consent forms, age checks and release forms are kept for a stretch of time after each appointment, and a buyer will want to see how they are stored and who will have access to them after closing. Treat the files as something that moves with the business and confirm with your attorney how to handle the transfer.

The deposit problem

Most shops take deposits for booked sessions, and large pieces are booked months ahead. A buyer sees those deposits as money the shop owes in work. If the shop has collected a lot of deposits for the next six months, the buyer will want that cash credited to them at closing, because they will do the work without being paid again. Sellers are sometimes surprised by this. Add a line to your records showing deposits held, by artist and by date, and the conversation goes faster.

Gift certificates work the same way. Keep a list of outstanding ones.

Lease, space and equipment

Tattoo shops need a particular kind of room. Plumbing for hand sinks, hard surfaces, separated work areas and a landlord who is comfortable with the trade. A buyer's first worry is whether the lease can be assigned and whether the term left is long enough to justify buying. Landlords have been known to refuse a business like this when a new owner comes along, so we encourage you to look at your lease early. See our post on the lease and landlord consent.

Equipment is modest by comparison with other trades. Chairs, lights, machines, power supplies, the autoclave, a reception setup and a stock of supplies make up most of it. The artists often own their own machines, so list what the shop owns and what belongs to others. Buyers sometimes assume everything in the room is included, and sorting it out ahead of time avoids a disagreement later.

What records to gather

A buyer and their lender will want business tax returns, monthly profit and loss statements and a balance sheet. They will want a booth rent schedule or an artist payout report, a list of deposits and gift certificates held, and sales reports for any piercing and retail lines. They will ask for the lease, insurance policies, all permits and health inspection reports, and the sterilization logs. Our post on getting financials ready explains how to present them.

If some booth rent or tattoo income was taken in cash and never reached the books, a buyer cannot count it. We tell owners this early, because fixing it takes time.

What tends to sink a sale

The main cause is an artist leaving. If the lead artist hears about the sale and walks, with their clients, the shop loses much of its value in a week. Others fail on missing permits, poor sterilization records, an unresolved lease or a seller who held on to deposits. A rumor in a small trade spreads fast, so confidentiality matters. We market without naming the shop and have buyers sign a nondisclosure agreement first.

Getting ready

Begin by getting the artist relationships in order. Written agreements with each artist, covering rent, art ownership and notice, give a buyer something to rely on. Move the shop's accounts into the business's name. Gather the logs and permits into one folder. Keep a deposit ledger. If you are the top artist, consider building up a second one before you list.

Business Advisors of America starts with a valuation from your own figures, prepares the materials a buyer will expect and screens buyers before they see anything that identifies the shop. If you are thinking about selling a tattoo shop, that page is a good place to start and a short call with us follows from there.

This article shares our opinion and general information. It is not legal or tax advice. Always speak with a licensed attorney for legal advice, and a qualified tax professional for tax questions, before you act.