If you’ve ever daydreamed about selling your distribution business, this episode is for you. If not, bookmark it for future reference. The fundamentals of a successful acquisition remain evergreen, beginning with the need for a knowledgeable advisor. Marshall Jones, senior advisor with The Distribution Team, joins Jason to discuss his latest client win, a year-long transaction process that resulted in an equitable solution for all parties involved. They share practical advice on navigating the purchase journey and realistic timetables for closing a sale. They also explore complex acquisition issues related to real estate holdings, employee transition, and cultural fit.
“I know a lot of folks think when I finally reach that point in my life that I’m ready to sell, all I have to do is make an announcement and, two days later, I’ll be setting off on some cruise. That’s not how it works,” says Marshall, who cautions prospective sellers not to think in terms of anything less than a year’s worth of runway. That’s where an experienced outside advisor comes into play. Besides aiding the seller in the due diligence process, a trusted intermediary can provide cover when dealing with multiple suitors or prickly LOI issues.
“There’s a lot of vetting, a lot of conversations that have to be held in a very discreet way so that word doesn’t get back to your staff, vendors, customers, competitors,” confides Marshall, who’s quick to clarify that a sale isn’t about keeping things secret. It’s about crafting the best outcome for all. “I don’t think many traditional business brokers or investment bankers think about how valuable the relationships are between your key employees and your customers or vendors, and what you need to do to really make sure that that’s all buttoned up.”
Ultimately, an advisor manages expectations on both sides of the sale. “Setting a fair market price, one that you and your company can live with and, at the same time, is a fair price for the acquirer to accept, those kinds of things are all a big part of what we’ll do in the early days,” says Marshall.
QUOTES
“People often think of the owner, their job, as being so free and set their own schedule, and they could go do whatever they want to whenever they want to. But, as this podcast is probably really kind of aimed at owners, I think owners will know that that’s not always the case.”
“When I sold my business, it was about nine months that I was involved, from kind of the first conversations to the closing. But, I really feel like a year is more in line.”
“As the seller, you certainly wanna sell it for as high as you possibly can sell that business, and having someone advocate on your behalf really makes you feel more comfortable that you’re getting a fair shake.”
“When you’re thinking about selling a local competitor, it’s actually one of the best potential prospective acquirers that you can talk with, but it is really hard for you to directly talk to your local longtime competitor.”
“Although there are a lot of potential acquirers out there, very quickly the field narrows.”
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Distribution Talk is produced by The Distribution Team, a consulting services firm dedicated to helping wholesale distribution clients remove barriers to profitability, generate wealth, and achieve personal goals.
This episode was edited by The Creative Impostor Studios.
Special thanks to our sponsors for this episode: Moblico, helping businesses do more business on mobile devices; and INxSQL Distribution Software, an integrated distribution ERP software designed for the wholesale and distribution industry.
