The value of a distribution business is not the sum of its shelves. Tucson Business Brokers Office helps owners prepare an inquiry that explains customer earnings and the relationships behind the inventory.
Begin with rights and relationships
Identify exclusive territories, dealer agreements and supplier terms. Read the change of control and assignment language before saying those rights will pass to a buyer.
Review whether customers buy from the company or depend on your personal product knowledge. A planned handover may need product training, supplier introductions and support for key accounts.
Distinguish saleable stock from old purchases
A detailed inventory schedule is more useful than an unchanged balance sheet total. Identify obsolete, damaged, slow or consigned stock. Use a consistent count date and explain the valuation method.
- Customer sales and gross margin by category.
- Supplier terms, concentration and territorial restrictions.
- Inventory aging and stock ownership.
- Receivables aging, deposits and expected working capital.
Earnings and working capital tell different stories
Strong reported profit can sit beside late collections and excess stock. A buyer will ask how much money must remain in the business to serve customers after closing.
Do not assume the advertised price includes every dollar in receivables or inventory. Those terms depend on the transaction and should be written clearly in the agreement.
Prepare for a buyer who checks the detail
Keep supplier account credentials and named customer reports out of the public inquiry. Start with a summary. The valuation partner can explain how a more detailed review may proceed.
Use resolve customer concentration before going to market and prepare equipment records for a business valuation to identify gaps in your file.
If property is part of the deal, read how to separate building value, then request a valuation introduction.