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Who can value a distributor with inventory, vehicles, and warehouse space?
How inventory, vehicles and warehouse space affect a distributor's value, and who can put a credible number on it.
By Michael D. Rubin, CEO & Founder · September 2026 · 851 words
An M&A advisor or valuation professional who values distributors on their earnings, then treats inventory, vehicles and warehouse space the way buyers actually do, can value it. MDR & Associates does this for Texas distributors, starting with a free opinion of value and, when needed, a formal third-party valuation. The key point for owners: in most sales those assets are not added on top of an earnings-based price. They are part of what produces the earnings, so they are usually included in it.
That surprises many distribution owners who paid real money for stock, trucks and a building. Here is how each asset is typically handled, and where it can still move the number.
Start with earnings, not the balance sheet
Buyers of a profitable distributor usually start with adjusted EBITDA: earnings before interest, taxes, depreciation and amortization, corrected for owner perks, one-time costs and the owner's pay at a market rate. They multiply it by a number that reflects risk and growth. For companies with $3 million to $100 million in revenue, that multiple is most often three to seven times adjusted EBITDA. The result is the enterprise value, the price of the operating business including the assets it needs to run.
The physical assets matter in two ways. They affect the multiple, because a modern fleet and a well-run warehouse lower a buyer's risk. And they drive the adjustments made at closing.
How buyers treat each asset
| Asset | Usual treatment | What changes the number |
|---|---|---|
| Inventory | Included in the price through the working capital peg, at a normal level | Obsolete or slow-moving stock written down; stock above normal may be paid for separately, or not at all |
| Vehicles and equipment | Included in the price, because they are needed to earn the EBITDA | An aging fleet due for replacement lowers the offer; leased vehicles bring lease obligations |
| Warehouse you own | Often kept out of the business sale and leased to the buyer, or sold separately | Rent set at a market level; a sale-leaseback or separate real estate sale |
| Warehouse you lease | Lease assigned to the buyer, or a new lease signed | Remaining term, renewal options and landlord consent |
| Receivables and payables | Part of working capital | Old receivables unlikely to be collected are excluded |
The working capital peg is where inventory value is really decided
A working capital peg is an agreed normal level of receivables plus inventory, minus payables, that the company must deliver at closing. Deliver more and the price usually rises by the difference; deliver less and it falls. For a distributor, inventory is often the largest piece, so the peg negotiation can move the final number more than a small change in the multiple.
Buyers will test your inventory with a physical count, an aging of items, turns by product line, and a look at how you handle returns and damaged goods. A distributor whose books show more inventory than the shelves, or that carries dead stock at full cost, loses value in due diligence. Our guide on preparing your business for sale covers the records that prevent this.
When the assets set the floor
If a distributor's earnings are thin, the assets matter more. A buyer may value the company near what its inventory, fleet and receivables would bring if sold off, with little or nothing paid for goodwill (the value of customers, name and relationships beyond the hard assets). That is a floor, not a target, and it is a sign that improving earnings before a sale may be worth more than any argument about asset values.
An owned warehouse is a separate decision. Some owners keep the real estate and collect rent from the buyer; others sell it with the business. Your CPA and attorney should compare the tax and estate effects before you choose.
How to choose who values it
Ask any valuer, including us: have you valued distributors before, will you explain the working capital peg in plain terms, will your number hold up in front of a buyer or a bank, and what does it cost? An M&A advisor's opinion of value tells you what the market is likely to pay. A formal third-party valuation, often needed for estate planning, partner buyouts or lenders, is a written report prepared to a recognized standard by an independent appraiser.
Be wary of any number that arrives before anyone has looked at your inventory aging, fleet list and lease. For a distributor, a value built on revenue or earnings alone misses the closing adjustments that decide what you actually take home, and those adjustments are where owners are most often surprised.
How we value a distributor
MDR & Associates starts with a free, confidential discovery meeting and an opinion of value, a low-to-high range, after reviewing three years of financials. We recast the earnings, review inventory and fleet, and show you where the working capital peg is likely to land. When you need a formal report, our business valuation service provides one as a separate, optional engagement. You can see the kinds of distribution companies we work with, or begin with a free valuation snapshot.
Where this fitsSelling a distribution company in Texas →