Manufacturing, Industrial & Distribution · Buyer guide
Buying a Nondurable Goods Wholesaler & Distributor business
Published · Reviewed by The Diligence Standard Team · Updated
a Nondurable 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
Inventory freshness, turns, customer/supplier concentration, category margin, logistics, credit and working capital drive value.
Risks to test
- Perishable/obsolete inventory
- Supplier concentration
- Customer concentration
- Thin margins/freight inflation
- Credit/AR exposure
- Working-capital intensity
Evidence to request and reconcile
- Inventory aging/expiry
- Customer/category margins
- Supplier agreements
- AR/AP
- Fleet/freight
- Warehouse records
Decision questions
- What stock is at risk of expiry/obsolescence?
- Which accounts/categories create profit?
- What supplier terms transfer?
- How much working capital is required?
- What logistics cost is normalized?