How to Sell a Wholesale Distribution Business

How to Sell a Wholesale Distribution Business 2019-10-23T09:37:45+00:00

Wholesale distribution businesses come in a variety of different forms, yet the goals their owners set when pursuing a sale are largely the same. Whether you distribute consumer, industrial, or chemical products, you’re looking for the same outcome – a timely sale on the most favorable terms possible.

At VR New Haven, we specialize in serving the wholesale distribution market. We have the depth of expertise and specific industry experience necessary to help wholesale business owners complete a sale on their preferred terms.

Here’s a closer look at the steps owners need to take when selling their wholesale distribution businesses.

Selling a Wholesale Distribution Business

Successful business sales almost all share the same characteristics. By the same token, transactions that do not meet expectations tend to fail for similar reasons. Unfortunately, many business owners may only experience a single sales event in their careers. Therefore, they often lack the experience to identify the commonalities between successful sales and the shared problems that derail fruitless deals.

A well-established business broker, on the other hand, is ideally suited to offer expert guidance, drawing on years of experience within dozens of industry verticals. At VR New Haven, we believe that wholesale business owners need to pay particular attention to the following four areas when pursuing a sale.

Setting a Proper Valuation

If you want to sell a wholesale distribution business successfully, you need to know exactly what it is you’re selling and how the market values it. In other words, your company’s value isn’t merely a few lines on an accounting spreadsheet. If you want to arrive at a true and accurate appraisal, you need to take a holistic approach.

What does this mean? It’s simple – your company’s value consists of a variety of assets, both hard and intangible. These might include the sterling business reputation you’ve worked years to build or the deep relationships you have with vendors or the types of customers and markets your firm sells into. These things may not fit neatly into a spreadsheet column, but they can often be the difference between a successful enterprise and one that can’t meet its potential.

Given their importance, it’s essential that these assets be taken into consideration when developing a valuation. However, many business owners do not have the requisite skill or experience to arrive at a holistic estimate. Therefore, it often makes more sense to work with a qualified business broker.

Maintaining Confidentiality When Necessary

Selling a business often requires special sensitivity. For example, you may not want your customers or your employees to know that a sale is under consideration or will be pursued. News like this, if received out of context, can have a destabilizing effect. Employees may begin to worry about their future, and customers may become concerned about continuity.

However, there is a simple solution – hiring an experienced business broker. At VR New Haven, we can help you maintain confidentiality by only sharing identifiable company details with prospective buyers who have completed non-disclosure agreements. We can also pre-qualify potential buyers before offering them information, reducing the possibility of non-serious buyers entering the equation.

Building a Competitive Bidding Market

Selling a wholesale distribution business is much easier when you have a marketplace of interested bidders. Attracting attention from multiple buyers shifts the leverage in favor of the seller. Not only does interest from various parties reinforce the value of the wholesale business being sold, but it also may encourage buyers to create a bidding war.

Developing this kind of robust market is much easier when you’re working with an experienced business broker. This is because brokers keep a database of qualified buyers. They know what kind of buyers are out there, the types of businesses they are looking for, and how to pique their interest.

Do Your Due Diligence

A successful wholesale distribution business sale begins and ends with attention to detail. Owners need to ensure that all company records (financial or otherwise) are accurate and up to date. They should also compose a business history and ensure that all documentation related to a sale is easily accessible and completed on time.

The right business broker can play a key role in the process, ensuring that you don’t get bogged down in paperwork or miss a critical deadline. Watching a deal get derailed as a result of poor planning is a painful experience for everyone involved. Therefore, it’s imperative to get in front of these issues on day one.

Choosing the Right Business Broker to Help Sell Your Wholesale Distribution Business

At VR New Haven, we specialize in working with wholesale distribution companies. Our experienced business brokers analyze each prospective transaction from a variety of angles to ensure an accurate valuation. This assessment includes not only your company’s current value but also its future growth potential.

Some of the key elements we consider when working on a wholesale distribution sale include:

  • A company’s revenue streams and how diverse they are.
  • The quality and sustainability of distribution channels.
  • Potential for growth, both in terms of overall market share and geographic expansion.
  • The competitive landscape – who is the company competing against? What are its strengths and weaknesses?

Wholesale distribution business owners who work with VR New Haven can benefit from our extensive track record of successful sales. This experience has given us an unmatched understanding of industry issues affecting valuations and deal structures.

We also maintain a vast database of both interested and qualified buyers in a variety of industries. Unlike other business brokers, we offer true domain expertise in a wide range of industries. We’re fluent in all industry-specific language, and we know which issues are relevant to both buyers and sellers in each sector. Click here to view the other industries we have business sales experience in.

If you’re a wholesale business owner in need of a trusted CT business broker firm, look no further than VR New Haven. To learn how our 9 step sales process can help you sell your business quickly and efficiently, contact us today!