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Wholesale and Distribution Business Back to our services

Wholesale and Distribution Business 

Wholesale and distribution businesses span across all industry sectors in the economy.  The major classifications can be:-

  • Food related
  • Automotive
  • Building/construction
  • Printing 
  • Agricultural 
  • Clothing and Footwear  
  • Leisure Industries 
  • Medical related

Wholesaling and distribution businesses deal not only with locally manufactured products (and therefore their sectors can mirror the local manufacturing industry) they also operate extensively with imported goods. 

Typical buyers are:-

  • Attracted from a wide range of backgrounds
  • Businesses with special product lines or agency agreements are in demand by other businesses seeking to grow by acquisition.

What is a typical wholesale/distribution business worth?

Note:  The information provided is general in nature and is presented as a guide only every business has its own unique qualities.  It does not take into account the specific characteristics of a particular business and the market conditions that exist at the time of transaction.

Characteristics:
The specific industry sector can have its own valuation drivers.

  • Ownership of established brands will have distinct impact on the level of goodwill for the business 
  • Uniqueness of the products 
  • Exclusive arrangements 
  • Level of technical expertise  
  • Predictable level of demands  
  • Length of the agency agreement  
  • Source of new business

The actual value is very dependent on the specific industry and the size of the business.  Each industry has its perceived desirability.

For smaller wholesale and distribution businesses the valuation can be little more than or sometimes less than 12 months of earnings to the “working owner” as once again the owner is the business and very often has a close personal relationship with suppliers and customers.

Often it is necessary to carry high levels of stock (particularly in importing businesses where there can be a long lead time to obtain new stock) and the need to extend credit to customers, a high level of working capital (made up of stock and debtors) required in wholesale distribution businesses can form a major part of the investment requirement for these businesses.

Larger business, especially those representing established brands, with exclusive supplier/client agreements and management teams in place can be very attractive as they can:

  • Be operated under semi/full management   
  • Have more predictable revenue and profit margins
 
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