Start with cash tied up in the shelves
Inventory can look valuable on a balance sheet while tying up the cash a buyer needs to operate. Separate current stock from slow items, damaged goods, and products you cannot return.
Minneapolis Business Brokers Point helps owners start a valuation conversation about distribution earnings and the working capital needed to support them.
Review sales and gross profit by product group. A large account with thin margins can tell a different story from a smaller group of steady, profitable customers.
Define what the asking price includes
Inventory, receivables, cash, and trade payables do not automatically travel together in a business sale. Put the proposed treatment in writing before comparing offers.
Discuss the inventory count method, the count date, and how obsolete goods will be valued. A closing adjustment should follow an agreed process.
Check the relationships behind the revenue
Supplier concentration and customer concentration create different risks. A buyer may need consent to retain a territory, distribution appointment, or favorable credit terms.
Prepare a summary of rebate arrangements, return rights, and purchasing commitments. Explain which are written agreements and which depend on personal relationships.
Show an operation a buyer can continue
Receiving routines, order accuracy, delivery routes, and purchasing controls help explain how the business functions without the owner handling every exception.
A broker opinion of value should consider that operating picture. Revenue alone does not show the financing burden of stocking the warehouse or collecting accounts.