Selling a Distribution Business in Florida
A Guide for Florida Distribution Business Owners by Patrick Archer, MBA, CBI, CM&AP | Florida M&A Advisor | Calder Associates of Florida | 305.763.4112 (Mobile) 407.499.2855 (Office)
Selling a Distribution Business in Florida
Selling a Distribution Business in Florida is an important decision for owners of these essential business in the Sunshine State. Product, material and supply distributors collectively comprise one of the most important contributors to Florida’s annual GDP which is fast approaching $1 trillion.
Owners contemplating selling a Florida wholesale distribution business must weigh the pros and cons of selling the business in today’s environment. Retirement is the primary motivating factor for most owners, while other owners may be planning to pursue new ventures in different industries.
Regardless of the motivations, sellers of distribution businesses in Florida will want to package and price the business to stand apart from competing listings and attract potential buyers. Many of these buyers are looking to take ownership of a successful business in Florida and tap into the positive demographics, population growth, logistics infrastructure and other trends benefitting Florida small business owners today.
Timing Considerations when Selling a Distribution Business in Florida
If you are the owner of a successful wholesale distribution business in Florida, now could be a great time to take advantage of these trends and the rising demand among U.S. and international buyers for great businesses for sale in Florida that are established, profitable, “essential” in the eyes of local governments, and resistant to external pressures like recessions, foreign made goods, and changing consumer tastes.
Selling a Distribution Business in Florida today can also help sellers command top dollar considering the supply and demand imbalance of available distribution businesses in Florida post-pandemic. While the pandemic wiped out thousands of small Florida businesses in sectors like restaurants, gyms and beauty salons, Florida distribution businesses emerged stronger and more attractive in the eyes of their owners, their customers, and potential buyers.
The Wholesale Distribution Sector in Florida
It should come as no surprise that the wholesale distribution sector in Florida is one of the vital markets in the United States. With four major cargo ports, Florida is a major gateway for merchandise in the Western Hemisphere. Florida’s vast network of interstate highways and rail cargo terminals also make it an ideal hub for receiving and transporting goods throughout the Sunshine State, the Southeast and the entire East Coast.
Demand in this already booming industry only accelerated following the Covid-19 pandemic, as online business models and deliveries finally eclipsed the traditional retail model in 2021. E-commerce requires three times the logistics space of traditional retail, according to an industry report from Prologis. And every $1 billion of e-commerce sales requires an additional 1 million square feet of new distribution space, according to Supply Chain Quarterly.
Simultaneously, more residents and companies fled the punitive tax regimes and failed anti-business policies of northern and Midwestern states like New Work, New Jersey, Connecticut and Illinois. New Florida residents with experience in warehousing, logistics and distribution in other states are now applying those same skills to Florida-based operations either as employees, managers and owner/operators .
“Florida is a major gateway for merchandise trade in the Western Hemisphere”
Great opportunities abound for buying a distribution business in Florida. Experienced warehouse and distribution business owners can tap into Florida’s lucrative market by acquiring an established distribution business serving high-demand, high-growth segments like apparel, consumer products, construction materials, durable goods, food service products, fresh produce, industrial supplies, marine equipment, medical equipment, specialty equipment, tools and dozens of other niche wholesale distribution categories.
Skills needed to Operate a Distribution Business in Florida
As in all states, the warehouse and distribution business in Florida is highly competitive, and owners of the most successful distribution businesses have many years of experience and hundreds of satisfied customers who depend on these companies for consistent access to products, preferential pricing, quality control, and reliable, on-time delivery.
Current owners thinking of selling a distribution business in Florida will want to know that potential buyers of the business have the operational knowledge, managerial skills and financial resources necessary to manage and grow the business for the next generation.
Most buyers of wholesale distribution businesses in Florida will pursue SBA financing, and most SBA lenders will want to see that the buyer has some knowledge or relevant experience in the logistics and distribution arena.
“SBA lenders will want to see that the buyer has relevant distribution experience”
Ideally, a future owner of a distribution business in Florida would already have several years experience as an employee or owner/operator of a distribution business in their home state or home country.
Many owners of established wholesale distribution businesses in Florida will only consider selling their business to a buyer who has a proven track record of experience in the industry or a related industry, either as an employee or an owner/operator of the business. Most SBA lenders will view potential buyers through the same lens of relevant distribution experience and qualifications.
Best Cities For Selling a Distribution Business in Florida
For potential buyers open to living anywhere in the Sunshine State, sellers of distribution businesses in Florida will be competing with other owners of similar business statewide. These buyers will be weighing several factors including a variety of demographic and quality of life metrics that will impact both their decision making process.
“Sellers of Florida Distribution businesses will be competing with owners of similar businesses statewide”
Florida’s population of 23 million is spread throughout the state’s 67 counties, but the largest clusters of high net worth households paying top dollar for goods and services are concentrated in the southern half of the state along a ring of 14 coastal counties on the Atlantic Ocean and the Gulf of Mexico. This “golden horseshoe” of Florida demographics encompasses the 25 Wealthiest Zip Codes in Florida based on Average Gross Income.
“This 14-county coastal region is the Golden Horseshoe of Florida demographics.”
This coastal region extends from Tampa/St.Petersburg on the Gulf side, south to Naples/FortMyers and down to the Florida Keys, east to Miami/Fort Lauderdale and extending north through the coastal communities of Pompano Beach, Boca Raton, Palm Beach, Jupiter, Stuart, Hobe Sound, Port Saint Lucie, Vero Beach and Melbourne. Some of Florida’s largest and most profitable wholesale distribution businesses are located in this 14-county coastal region.
This coastal region of South and Central Florida also encompasses 9 of Florida’s major seaports including Port of Miami, Port of Tampa, Port Everglades, Port of Palm Beach and Port Canaveral.
And, of course, no conversation about desirable areas to live and own a business in Florida would be complete without mentioning the Orlando metropolitan area. “The City Beautiful” is one of the fastest-growing metros in the country, and the influx of new residents creates ample opportunities for new and existing business owners.
“With over 2 million residents, Orlando’s economy is booming and increasingly diverse”
Long known as a tourism mecca and home to theme park giants like Disney and Universal, Orlando’s economy is increasingly diverse. And world class infrastructure improvements like the new $3 billion Terminal C at Orlando International Airport facilitate domestic and international arrivals and intrastate travel with the addition of Brightline, a high-speed rail link between Orlando and South Florida metros like Miami, Fort Lauderdale and West Palm Beach.
Median Asking Price of Distribution Businesses For Sale in Florida
Once you’ve decided on selling a distribution business in Florida, it’s a good idea to work with a licensed Florida M&A advisor to get a better understanding of the current value of your business and a most probable selling price to qualified buyers business with some combination of cash and financing, either through an SBA loan, seller financing, a bank loan, a leveraged buyout, assumption of debt, or some other buyer/seller arrangement.
According to the statewide database of businesses for sale in Florida, the median annual asking price of distribution businesses for sale in Florida is $2,650,000.
“The median asking price of Florida distribution businesses for sale is $2,650,000”
The range of asking prices for Florida Distribution businesses for sale currently extends from $1,300,000 on the low end to $5,375,000 on the high end for Florida distribution businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
Median Annual Revenue of Distribution Businesses For Sale in Florida
With the right team of talented employees, solid supplier relations and an established customer base, distribution businesses in Florida can be great revenue generators for both current and future owners. According to the statewide database of businesses for sale in Florida, the median annual revenue of distribution businesses for sale in Florida is $2,877,000.
“The median annual revenue of Florida distribution businesses for sale is $2,877,000”
The range of annual revenue for Florida distribution businesses for sale extends from $1,200,000 on the low end to $14,800,000 on the high end for Florida distribution businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
Median Cash Flow of Distribution Businesses For Sale in Florida
Established and well managed distribution businesses in Florida can produce significant cash flow benefitting both the current owner and future owners of these businesses.
“The median annual cash flow of Florida distribution businesses for sale is $532,000”
According to the official database of businesses for sale in Florida, the median annual cash flow or owner benefit for distribution businesses for sale in Florida is $532,000. As such, distribution businesses in Florida enjoy a median cash flow of 18% of annual revenues. ($532,000 / $2,877,000 = 18%)
The range of annual cash flow for wholesale distribution businesses for sale in Florida extends from $390,000 on the low end to $1,190,000 on the high end for Florida distribution businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
“The median payback period for a Florida distribution business is 4.95 years.”
Based on these same numbers, the ratio of median cash flow to asking price for existing Florida distribution businesses for sale is 20% ($532,000 / $2,650,000) which translates into a median payback period of 4.95 years.
Additional Resources for Selling a Distribution Business in Florida
Selling a Distribution Business in Florida is a major life decision that requires serious due diligence and sound guidance from an experienced and trusted M&A advisor.
If you would like to schedule an initial consultation regarding your Florida distribution business, current valuation and next steps, please call us at 305.763.4112, schedule a free consultation, or use the contact form below.