Current valuation multiples for industrial equipment distributors

by a searcher from Cornell University

1 year ago

Hello, we are planning on making an offer to an equipment distributor; does anyone know what a current range of valuation multiples are for these types of companies or any good sources for this data? The types of equipment sold are valued at around $1-2mm. The company is a stocking dealer that will import the equipment from abroad and assemble it onsite for the client but that is the extent of their value added services. They never really hold any inventory (even spare parts). Also, does anyone know funding sources that like opportunities in this sector, as we have an experienced management team assembled with a plan to turn this into a higher margin, more scalable, additional value-added services company over time ? Thanks in advance. ^Searchfunder member‌

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searcher from National University of Ireland, Galway

I only have experience with a couple of failed transactions from a seller perspective. In both cases the multiples were low relative to businesses who have their own brand of equipment. Distributors / reseller profits seem to be discounted by buyers due to the risk of loosing the territory exclusivity, if there is any. If you do get industry data for resellers then maybe add discount or premium, depending on the actual risk of loosing rights in this scenario.

1 year ago | like reply | 0 likes

intermediary from Western Washington University

Not enough info to hazard a reply. Get the NAICS code and beg or borrow access to Deal stats and look for precedent transactions in the same space, run a DCF and then pull public transactions in the same code and then assemble a football field range of values.

1 year ago | like reply | 0 likes

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