Who Usually Buys
- Larger distributors
- Buy customers and product lines to widen their reach.
- Strategic suppliers
- Want direct access to your accounts.
- Private investors
- Back a business with a general manager already in place.
Supplier and Customer Spread
A distributor has two sides to protect. If one supplier provides most of your product, or a few customers buy most of it, buyers see transfer risk. Where the agreements are only handshakes, put the terms in writing before you list.
Concentration over roughly fifteen to twenty percent usually brings a price cut of that scale.
Inventory and Working Capital
Stock can be a yellow flag, since a lender may refuse to finance a deal with too much inventory for the earnings. Buyers also check what working capital must stay in the company. If the buyer has to fund it, the real price rises.
Clean up the balance sheet. Old items still on it signal weak books, and unreconciled books can kill a deal even with strong profit.
Warehouse Lease
Distribution runs on a location. Read the lease for renewal rates, percentage rent and assignment language, and ask your landlord early. If you own the building, think about a separate path for the real estate, as the lease guide describes.
Margins Over Time
Buyers read the multi year story. If margins fall while sales dip, they will ask about pricing, freight and write offs. Have an answer ready, and bring monthly figures for the last three years.
Systems and People
Buyers favor firms where an order desk, a warehouse lead and a bookkeeper keep things moving without the owner. Document the software, vendor logins and routines.
Next Steps
Look at CDTFA tax clearance, then request a valuation.