As the merger and acquisition marketplace for wholesale distribution companies continues to be very active, an increasing number of distribution company owners have begun to contemplate selling their business. While the sale of a company is equal parts art and science, one thing is clear - owners and operators who properly prepare for a sale and take into consideration the main criteria buyers use for assessing the attractiveness of an acquisition consistently achieve more favorable outcomes.
The following is a synopsis of key steps one should take in preparing a business for sale, the criteria that most buyers of businesses look at when considering an acquisition and some of the distribution-specific criteria I focused on while executing acquisitions for HD Supply and Hughes Supply.
Preparing For A SaleOnce an owner or group of shareholders determines their desire to sell the company, it is necessary to follow a core set of steps to best position the business:
What Buyers WantIn addition to the sale preparation steps mentioned above, it is important to recognize what a buyer of a business will look for in a potential acquisition. Future sellers can use these guidelines when considering improvements to their businesses or in determining if they are an attractive acquisition target:
Key Value DriversWhile the aforementioned apply to almost all companies in a sale process, there are certain factors that are more specific to distribution businesses that buyers will focus on:
Consolidation within wholesale distribution remains active and offers opportunities for quality businesses to pursue a successful sale process. For those looking to maximize the outcome of a sale, please take note of the value drivers mentioned here as you prepare for the sale.