durable goods distribution for Sale

Pull the customer list ranked by revenue. Many wholesale businesses get 40–60% of revenue from their top 10 customers, and 15–25% from the single largest. If your top customer represents 20% of revenue and they're up for renewal in 90 days, that's a structural problem. Ask for written customer concentration analysis with renewal status and historical retention rates. Heavy concentration is a discount factor; broad customer base is a premium factor.

The business runs on receivables and inventory. Wholesalers typically extend 30–60 day payment terms to customers while paying suppliers in 15–30 days, financing the gap with inventory and bank lines. A wholesaler with $5M in revenue often has $1M+ tied up in inventory and $700K in receivables. When you buy the business, you're buying that working capital too — often as a separate component on top of the goodwill price. Verify what's actually included and what triggers price adjustments at close.

Call the top suppliers. Distribution agreements with manufacturers often include change-of-control provisions — the supplier can approve or deny the new owner. Lose a key brand and you may lose the customers who buy that brand. Get supplier consent (or at least informal indications) before LOI. Some manufacturers also have geographic exclusivity that the new owner needs to be approved to maintain.

Calculate inventory turns yourself. Healthy distributors turn inventory 6–10 times per year (sometimes higher for fast-moving consumables, lower for slow-moving specialty items). A wholesaler turning inventory 3 times per year has dead stock, obsolete SKUs, or buying problems. Pull a SKU-level aging report. Anything sitting more than 12 months is functionally written off and should reduce the price you pay for inventory.

Identify the rainmakers. In B2B distribution, customers often have a primary relationship with their assigned outside sales rep, not with the company brand. If a senior rep with $2M in attached revenue leaves at close (or follows the seller into retirement, or is recruited by a competitor), you lose their book. Identify the key reps before close, meet with them, and structure retention bonuses. Non-compete agreements should be in place and enforceable.

Look at where the gross margin actually sits. Distributors selling commoditized products (basic electrical components, common plumbing fittings, standard hardware) compete almost entirely on price and service speed. Distributors selling specialty products with technical complexity, regulatory requirements, or scarce supplier relationships can hold meaningfully better margins. Mix matters. A wholesaler with 35% gross margin on specialty products and 18% on commodity items is a different business than one running 25% blended.