Most distribution and wholesale businesses in Texas sell for roughly 2.5x to 4x SDE (seller’s discretionary earnings), or about 3x to 6x EBITDA for larger operations. A company with $1 million in adjusted profit often lands between $3 million and $5 million, depending on customer concentration, margins, and recurring accounts.
That’s the short answer. But if you own a distribution or wholesale company in DFW, Houston, or Austin, you already know the real number lives in the details. Two businesses with identical revenue can be worth a million dollars apart. Let’s break down why, and how buyers actually price a business like yours.
How do you calculate what a distribution business is worth?
Buyers don’t pay for revenue. They pay for provable profit. So the first job is figuring out your true earnings, then applying a multiple that fits your size and risk.
For most owner-operated Texas distributors, we start with SDE (seller’s discretionary earnings). That’s your net profit, plus your owner salary, plus perks and one-time expenses that run through the business. A single owner taking a $150,000 salary and showing $400,000 in net profit might really have $600,000 in SDE once you add it all back.
Larger operations, say $1.5 million in earnings and up, usually get valued on EBITDA instead, because those buyers are hiring a manager and thinking about the business without you in it.
What multiple should I expect?
Here’s a realistic range for distribution and wholesale companies in the current Texas market:
- Smaller operations (under $500K SDE): about 2.5x to 3.5x SDE
- Established mid-size (roughly $500K to $1.5M SDE/EBITDA): about 3.5x to 5x
- Larger, systemized distributors ($1.5M+ EBITDA): about 5x to 6x, sometimes higher with strong contracts
Where you land inside that range is the whole ballgame. That’s what the next section covers.
What makes a Texas distribution business worth more?
We’ve watched two companies with the same sales walk out with very different checks. The difference almost always comes down to how the business is built.
Here’s what pushes your multiple up:
- Low customer concentration. If one account is 40% of revenue, buyers get nervous and discount hard. A spread where no single customer is more than 10% to 15% is worth real money.
- Recurring or contracted accounts. Repeat B2B customers and standing purchase orders beat one-off sales every time.
- Healthy, stable gross margins. Thin-margin commodity distribution prices lower than specialized or value-added lines where you’re hard to replace.
- Clean inventory. Dead or aged stock drags value. Buyers pay for product that actually turns.
- A team that runs without you. If sales walk out the door when you retire, you’re selling a job, not a business. Warehouse managers, sales reps, and documented processes raise the price.
- Books that hold up. Clean financials, real add-back documentation, and a working ERP or inventory system make a buyer comfortable paying full value.
Does location in Texas matter?
It helps more than people think. DFW sits on top of a national logistics network, with the intersection of I-35, I-20, I-30, and I-45 plus DFW and Alliance freight hubs. A distributor with a solid warehouse footprint and good highway access in the Metroplex is attractive to buyers who want a Texas base. Houston pulls energy and industrial supply. Austin brings tech and construction demand. Buyers, including out-of-state groups expanding into Texas, notice.
Why do owners get their value wrong?
The most common mistake is using a rule of thumb from a buddy at a trade show. “Distribution sells for 4x” is not a valuation. It’s a starting point that ignores your margins, your customer list, and your add-backs.
The second mistake is understating profit. A lot of owners run personal expenses through the company to lower taxes, which is fine, but at sale time those add-backs need to be documented or a buyer won’t count them. Undocumented add-backs are money you leave on the table.
The fix is simple: get a real valuation before you make any decisions. Our free business valuation returns a full value range and a custom report, so you know your number before you ever talk to a buyer. It’s the easy, no-risk first step, and it costs you nothing.
How long does it take to sell, and what should I do first?
A well-prepared distribution business in Texas usually takes six to twelve months to sell, sometimes faster with the right buyer. Here’s a smart order of operations:
- Get a professional valuation so you know your range.
- Clean up your financials and document every add-back.
- Deal with dead inventory and tighten margins where you can.
- Reduce customer concentration if one account looms too large.
- Build a simple transition plan so the business runs without you.
Owners who do this work ahead of time consistently sell for more, and with fewer surprises during due diligence.
We’ve spent 26 years doing exactly this, with more than 600 closed transactions and a BBB Torch Award for Ethics. It’s also why sellers leave us 90-plus 5-star Google reviews and counting. One theme comes up again and again from distribution and wholesale owners: they valued a clear, no-pressure process where they always knew what came next and never felt pushed. That’s the standard we hold.
“Weekly communication, action items, follow up to the finish line.”
— a seller describing how the process was run
Frequently Asked Questions
What is the average multiple for a wholesale business in Texas?
Most fall between 2.5x and 4x SDE for owner-run companies, moving up to 3x to 6x EBITDA for larger, systemized operations. Strong margins and low customer concentration push you toward the top of the range.
Is inventory included in the sale price?
Usually the valuation multiple covers the business and its normal operating assets, with sellable inventory added on top at cost or a negotiated value. Dead or obsolete stock is typically excluded or discounted, so cleaning it up before you sell pays off.
How do I increase my distribution company’s value before selling?
Document your add-backs, reduce reliance on any single customer, keep inventory turning, and make sure the business runs without you. Doing this six to twelve months ahead of a sale can meaningfully raise your final price.
Can I sell if one customer is most of my revenue?
Yes, but expect buyers to discount the price or structure part of it as an earnout tied to that account staying. Spreading revenue across more customers before you list almost always nets you a better deal.
Want a firm number for your business? Book a free consultation call and we’ll walk you through what your distribution or wholesale company is really worth in today’s Texas market.
Reviewed by Ian Biggs, The Vant Group – 700+ closed transactions since 1999, BBB Torch Award for Ethics.