Manufacturing, Industrial & Distribution · Buyer guide
Buying a Durable Goods Wholesaler & Distributor business
Published · Reviewed by The Diligence Standard Team · Updated
a Durable Goods Wholesaler & Distributor can look attractive on headline earnings while asset condition, regulation, customer behavior, inventory, people or owner dependence materially change what the buyer actually owns.
How the business works
Customer/supplier concentration, inventory turns, gross margin, rebates, credit terms, warehouse/freight and working capital determine value.
Risks to test
- Customer concentration
- Supplier/rebate dependence
- Aged inventory
- Credit/AR exposure
- Warehouse/freight costs
- Owner sales/purchasing relationships
Evidence to request and reconcile
- Customer/product margins
- Inventory aging
- Supplier/rebate agreements
- AR/AP aging
- Warehouse/freight
- Sales pipeline
Decision questions
- Which customers/products create gross profit?
- What inventory is obsolete?
- What rebates/terms are essential?
- What working capital is normal?
- How much relationship ownership sits with seller?