Manufacturing & Industrial · Buyer guide
Buying a Construction Materials Supplier business
Published · Reviewed by The Diligence Standard Team · Updated
a Construction Materials Supplier can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
Contractor/customer relationships, inventory turns, pricing spreads, delivery logistics, supplier terms and yard/warehouse capacity determine value.
Risks to test
- Inventory obsolescence
- Contractor concentration
- Supplier concentration
- Commodity pricing
- Fleet/yard CapEx
- AR quality
Evidence to request and reconcile
- Customer/category margins
- Inventory aging
- Vendor terms
- AR aging
- Fleet
- Property/lease
Decision questions
- What inventory is saleable?
- Which contractor accounts dominate?
- Can price changes pass through?
- How clean is AR?
- What fleet/yard CapEx is coming?