Austin · Industries
Which advisor can sell an Austin distribution company with recurring contracts?
What buyers pay for in a distributor's contracts, what they discount, and how to pick an advisor who can prove the difference.
By Michael D. Rubin, CEO & Founder · September 2026 · 809 words
MDR & Associates sells Texas distribution and wholesale companies and can represent an Austin distributor with recurring contracts; our advisors come to you, since the firm's corporate office is in Frisco. Whoever you hire, the job is the same: prove to buyers that your contracts are as durable as you know they are. Recurring contracts are one of the strongest things a distributor can bring to market, but only if they survive a buyer's review.
Why recurring contracts raise a distributor's value
Distribution margins are thin compared with many industries, so buyers look hard at how predictable the volume is. A signed supply agreement, a vendor-managed inventory program or a multi-year pricing contract tells a buyer that revenue will still be there after the owner leaves. That predictability is what moves a company toward the higher end of the range, which is most often three to seven times adjusted EBITDA for a business in the $3 million to $100 million revenue range.
EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted means the figure has been recast to remove the owner's personal and one-time expenses, so it shows what the company earns for a new owner.
What a buyer checks in each contract
The last row catches many owners by surprise. A contract that fixes prices but obliges the customer to buy nothing is useful, but it is not the same as committed volume. Buyers will read every agreement during due diligence, their detailed review before closing, so it is better to sort them honestly now.
| Contract feature | What helps | What worries a buyer |
|---|---|---|
| Term and renewal | Multi-year terms and a history of renewals | Contracts that expire soon after closing |
| Assignment and change of control | Contracts that transfer to a new owner without consent | Clauses letting the customer exit if the company is sold |
| Pricing mechanism | Built-in price adjustments when costs rise | Fixed prices while supplier costs climb |
| Customer concentration | Revenue spread across many accounts | One customer holding a large share of sales |
| Supplier side | Long-standing or exclusive lines with key manufacturers | Supplier agreements the manufacturer can end on a sale |
| Actual volume | Orders that match what the contract implies | A contract on paper with little real purchasing |
Get the contract file ready before going to market
That last point connects to working capital: the cash, receivables and inventory the business needs to run day to day. Purchase agreements often set a working capital peg, a target amount that must be in the company at closing, with the price adjusted up or down if the actual figure differs. For a distributor carrying large inventory, the peg can move the final price meaningfully, so it deserves attention early.
- Pull every customer and supplier agreement into one place, including amendments and emails that changed terms.
- Build a simple schedule: customer, start date, term, renewal history, annual revenue, assignment clause.
- Flag any contract that needs consent to transfer. Your transaction attorney should review these before a buyer does.
- Show revenue by customer for three years, so buyers can see retention, not just this year's list.
- Separate inventory committed to contracts from slow-moving stock.
Choosing the advisor
Ask how the advisor will present your contracts: not just that you have them, but what share of revenue they cover and how long they have renewed. Ask which buyers they would approach, such as distributors expanding into Central Texas, manufacturers wanting to be closer to their customers, or private equity groups building a larger distribution company. Ask how they will keep your largest customers and suppliers from hearing about the sale early. And ask how they are paid.
Ask, too, how they would handle a contract that needs the customer's consent to transfer. The usual answer is to leave that conversation until late, after a letter of intent and well into due diligence, and to have the buyer and owner make the call together. An advisor who wants to ask your customers early is putting the relationship at risk before there is a deal to protect.
For more on how value is set, read what is my business worth.
How we run it
We have sold distribution companies such as U-Fix-It Appliance Parts; our distribution page describes the work. Our advisors meet Austin owners at their office or somewhere discreet; the Austin page and the Austin contact page have the details.
We recast your financials, build a confidential marketing package and HD video, and present the contract schedule as part of the company's story. Buyers see a blind profile until they sign an NDA and prove they can fund the purchase, and we negotiate multiple letters of intent at the same time so competition sets the price. A principal of the firm is in every negotiation, and the fee is paid only if the company sells. The first step is a free valuation snapshot.
Where this fitsAustin business brokers and M&A advisors →