Sell My Distribution Business in Arizona
Eddy Roche, Associate Broker · AZ license BR579487000 · HUB AZ / Sunbelt Arizona
A distributor is a set of relationships sitting on top of a warehouse. The buyer needs to know your supplier lines stay put, your top accounts keep ordering, and the stock on the shelves is worth what the books say. I work those three questions before the teaser goes out.
Supplier lines are the first question
Most distributors do not make what they sell. The right to carry a brand in a territory is often the most valuable thing in the company, and it belongs to the manufacturer as much as it belongs to you.
So I ask for every line agreement before anything else. Some are written with assignment or change-of-control language. Some let the manufacturer approve or refuse a new owner. Some are a phone call and a price sheet. A buyer will pay differently for each, and a lender will ask the same question.
Your attorney reads the contract language. I am a broker, not your lawyer. My job is to find the approvals the deal needs early enough that the manufacturer hears about the sale on our schedule.
Inventory and receivables move the check
In a wholesale company the stock on the racks can be larger than a year of the owner's earnings. That makes the inventory treatment one of the biggest numbers in the deal. Many files are priced plus inventory at cost, counted jointly near closing. Others are all-in with a target level. Either way, product you would not reorder today gets pulled out of the count.
Receivables are the other half. Distributors extend terms to their accounts, so there is usually real money sitting in AR at closing. The buyer takes current receivables as working capital, or you keep and collect them. We decide which in the letter of intent and not in the last week of escrow.
How counts, dead stock, and schedules work is on inventory on Arizona business sales. The cash, AR, and payables side is on working capital on Arizona business sales.
Who buys from you, and who they call
Buyers read the customer list by revenue share. If a handful of accounts carry the year, they will want to know whether those accounts have written terms and whether the relationship runs through a sales rep or through you personally.
Concentration does not kill a sale. It changes the structure. A buyer may ask for part of the price as a seller note or an earnout tied to that account staying. I would rather show that risk in the first conversation than have a lender find it in underwriting.
How being the only person the big accounts call shows up on price is on owner-dependency Arizona. What a buyer requests once they are under LOI is on due diligence for Arizona sellers.
The warehouse and the quiet sale
Most distributors rent the building. If the landlord will not consent to an assignment, the buyer has inventory and no place to put it. I get the lease in front of the buyer early and start the consent package once the deal is real. The consent process is on lease assignment on Arizona business sales.
Confidentiality matters more here than in most sales. Competing distributors would love to call your accounts, and a manufacturer who hears the news secondhand may start talking to other distributors about your territory. Buyers get a teaser with no name, sign an NDA, and only then learn who you are. More on that process is on confidential business sale Arizona.
One example on the site today is the Wholesale Beauty Supply Business in Yavapai County. It is marketed by category and county, never by street address.
What to send me
Three years of tax returns, a current inventory list with ages, an AR aging report, your top customers by revenue, and copies of the supplier agreements you have in writing. From that I can tell you how I would price it and what a buyer will ask first.
Start with Value My Business. How I build the earnings number is on business valuation Arizona. What counts as an add-back is on add-backs and SDE in Arizona.
Who you are working with
I am Eddy Roche, Associate Broker, Arizona license BR579487000. I work under HUB AZ Brokers with Designated Broker Timothy Whipple, out of 4745 N 7th St, Phoenix, AZ 85014, and I take distribution files anywhere in Arizona. Call (480) 405-3200, 9:00 AM to 8:00 PM, seven days a week.
Related reading: inventory on Arizona business sales, working capital on Arizona business sales, business valuation Arizona, add-backs and SDE in Arizona, confidential business sale Arizona, lease assignment on Arizona business sales, due diligence for Arizona sellers, and owner-dependency Arizona.
Frequently Asked Questions
How is a distribution business valued in Arizona?
I start with Seller’s Discretionary Earnings, or EBITDA on a larger file with a management layer. Then I adjust for what makes distribution different: whether the supplier lines transfer, how much revenue sits with the top few accounts, and how much of the balance sheet is inventory and receivables. I do not quote a market multiple until I have seen your returns.
Will my supplier agreements transfer to a buyer?
It depends on the paper. Some line agreements are handshake arrangements, some are written with assignment or change-of-control language, and some give the manufacturer approval over a new owner. We pull every agreement early and your attorney reads them. I am a broker, not your lawyer.
Is inventory included in the asking price?
Sometimes. Many distribution files are priced plus inventory at cost, counted near closing, with dead and slow-moving stock excluded. Others are all-in with a target inventory level. The letter of intent should say which one, in plain English.
What happens to my accounts receivable?
Either the buyer takes current receivables as part of working capital or you keep and collect them. Both work. What does not work is leaving it unsaid until the week of closing. Run an aging report before we market so old invoices are not a diligence surprise.
One customer is a big part of my revenue. Can I still sell?
Yes, but buyers and lenders will price that risk. A written supply agreement with that account helps. So does showing the relationship runs through your sales staff and not only through you. We talk about it up front instead of letting a buyer find it in diligence.
How do I start?
Free confidential valuation at bizsalesguy.com/value-my-business or call (480) 405-3200. Send three years of returns, a current inventory list, an AR aging report, and copies of your supplier agreements. Eddy Roche, Associate Broker BR579487000.
Talk through the distribution file
Confidential and no obligation. I look at the supplier lines, the stock, and the customer list, then call you back with what I see.