Likely Buyers
- Larger distributorWants new product lines, new customers and more routes into the region.
- Private equity backed distribution platformLooks for steady margins and a warehouse that can serve a bigger network.
- Operator with an industry backgroundKnows the products and wants a company with supplier ties and a trained team.
Inventory drives the conversation
Inventory is both an asset and a flag. Heavy stock compared with earnings can break bank financing, and slow moving items may be worth far less than the books say.
Many buyers want a physical count before closing. Clear out dead stock before you list, and be ready to agree how inventory is valued at closing.
Supplier terms
If your best lines depend on one supplier, ask whether the agreement survives a sale. A line that the manufacturer can pull when ownership changes is worth much less than one with written terms.
Customers and margins
Customer concentration hits distributors hard. When a few accounts exceed roughly fifteen to twenty percent of sales, buyers discount the price or walk.
Buyers also study gross margin by product line and by customer. Margins that slide while sales hold steady raise questions about pricing and costs.
Working capital and the warehouse
Lenders may want working capital left in the business at closing. Agree early how much, because it changes what the buyer effectively pays.
The warehouse lease should show enough years, fixed rent steps and a path for landlord consent. If you own the building, plan for it separately from the company.
Documents to gather
- Three years of financial statements that match your returns
- Sales and margin by customer and product line
- Supplier agreements and rep letters
- An inventory report with age and cost
The note on customer concentration and the guide to the Ohio CAT account help with preparation. Then request a price opinion.