Selling a B2B distribution business

The problem

Plenty of good businesses don’t sell for what they’re worth, or don’t sell at all. Buyers walk away when the books aren’t clean, the business depends too much on the owner, or one customer is too big a share of sales.

And the real estate can kill a deal late: a landlord who won’t consent to an assignment, a lease with too little term left, or a property question nobody looked at early. Here, the warehouse lease and supplier agreements can matter as much as the customer list.

What I do about it

I start with a confidential look at the business and the real estate together, so the things that make buyers nervous get fixed before they ever see them. I know what active buyers are looking for, I help you get the business ready, and I handle the lease or property side, which is where a lot of sales get stuck.

Everything goes through Coldwell Banker Prestige Realty and is agreed in writing first.

Ready now or planning ahead, the first step is the same. See succession planning for what happens on the first call, realistic timing and what to gather.

What buyers in this space look for

• Supplier relationships that will carry over, ideally with written agreements or exclusive territories.
• A broad customer base with repeat orders, and no single customer that’s too big a share.
• Inventory that’s counted, current and turning over.
• Systems that work: ordering, stock, delivery and accounting.
• A warehouse with the right size, loading and location, on a lease that can transfer.
• Owner-operated, steady profit. Size is a moving target, but many of the private equity and holding-company buyers I talk to look for businesses with about $1 million or more in yearly profit (EBITDA). Some look smaller, and individual buyers often do.

Why and when owners sell

Retirement and succession top the list. Some owners also see that the next stage, a second location, new systems or a bigger warehouse, is a good job for a buyer with more capital.

How a confidential sale works

1. A first conversation. Just us. What you have, what you want and when.
2. A quiet look at the business and the real estate. I can tell you what buyers are likely to like and where they’ll push.
3. Getting ready. Statements, the lease or property, a list of what’s included. Your accountant and lawyer come in early.
4. Approaching buyers carefully. A short, anonymous summary first. Details only after a confidentiality agreement, and only to buyers you’re comfortable with.
5. Offers and due diligence. Usually a letter of intent, then a closer look at the books, contracts, staff, equipment and the lease.
6. The lease or property. Landlord consent and a release, or the property terms if you own the building. This is where deals often stall, so I start on it early.
7. Closing and handover. Many owners stay on for a set period to help with the transition, if they want to.

Where the real estate fits

Your warehouse lease affects the price. A buyer wants enough term, renewal options and an assignment clause that won’t stall the deal. If the space is too small for the buyer’s plans, I can help with that too.

Any work I do on a sale is through Coldwell Banker Prestige Realty and agreed in writing first. Where the sale is shares only, with no real estate, I’ll say so up front and work with your lawyer and accountant on those parts.

Where everybody wins

You want a fair price, care for your staff and customers, and a clean exit. A buyer wants a well-run business they can trust, with a lease or property that supports it. A landlord wants a strong new tenant.

When the business is ready and the real estate is sorted early, all three can say yes.

Questions people ask

Do supplier agreements transfer when I sell?

It depends on each agreement. Some can be assigned, some need the supplier’s approval, and some are informal. Buyers will ask, so it helps to know the answer first.

Should I sell before or after my warehouse lease renews?

Often it’s better to sort the lease first, so the buyer sees enough term and renewal options. Talk it through before you sign a renewal, because the right term depends on your sale plans.