Know exactly what to verify before buying a jan-san distribution business — from customer concentration and supplier exclusivity to inventory quality and driver retention.
Find Janitorial Supply Distributor Acquisition TargetsAcquiring a janitorial supply distributor in the $1M–$5M revenue range requires scrutiny of recurring commercial accounts, supplier rebate structures, route-based logistics, and inventory health. Deals typically close at 3–5x EBITDA using SBA 7(a) financing with a working capital peg tied to 90-day trailing inventory and receivables.
Verify normalized EBITDA, customer revenue concentration, and gross margin by product category before advancing to LOI or deeper operational review.
Request 3 years of tax returns and P&Ls. Identify personal vehicle expenses, owner compensation above market, and non-recurring costs to produce a clean EBITDA schedule.
Obtain revenue by account for trailing 12 months. Flag any single account exceeding 20% of revenue and assess contract status, tenure, and renewal terms.
Segment margins across commodity consumables, private-label products, and equipment. Identify where margin compression from Grainger or Amazon Business is most acute.
Assess the transferability of supplier agreements, inventory quality, and operational infrastructure including delivery routes and warehouse management systems.
Review all distribution agreements for change-of-control clauses, exclusivity provisions, and rebate structures. Confirm top vendors will honor terms post-acquisition.
Conduct a physical count and calculate SKU-level turnover rates. Identify slow-moving or obsolete stock inflating working capital and negotiate exclusion or write-down at close.
Evaluate delivery route efficiency, vehicle fleet condition, and whether same-day or next-day delivery capabilities supporting customer retention are maintainable post-close.
Confirm key-person risk is manageable, verify legal and licensing compliance, and finalize working capital peg and deal structure before closing.
Determine if the owner manages primary account relationships. Assess whether a sales rep or operations manager can assume responsibility and negotiate seller transition and non-compete terms.
Confirm all business licenses, commercial leases, and fleet registrations are current and transferable under an asset purchase structure without landlord or agency re-approval delays.
Set working capital target using 90-day trailing inventory and receivables average. Consider a 10–20% earnout tied to 12-month post-close retention of top commercial accounts.
Verify the Janitorial Supply Distributor acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Janitorial Supply Distributor meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Janitorial Supply Distributor must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Expect 3–5x EBITDA. Businesses with diversified accounts, exclusive supplier agreements, and gross margins above 28% command the higher end. Heavy customer concentration or owner-dependent sales compress multiples.
Yes. Most deals in the $1M–$5M revenue range are SBA 7(a) eligible. A typical structure includes 10–15% buyer equity, an SBA loan, and a 5–10% seller note held for two years post-close.
Request copies of all distribution agreements and look for change-of-control clauses. Contact top vendors directly during due diligence to confirm willingness to assign agreements and maintain rebate tiers.
Customer concentration tied to the owner's personal relationships is the most common value destroyer. Verify that at least two staff members hold active relationships with top accounts before closing.
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