What is different about buying an industrial supply (MRO) distributor?

An industrial supply distributor sells the items plants need to keep running: maintenance, repair and operating supplies, often called MRO. It looks like any wholesaler, but much of the business sits inside customers’ buildings and systems. That changes what a buyer should ask. The points below are questions for the seller, not facts about every business in the trade.

Stock at customer plants

Some distributors place stock at the customer through bins, vendor-managed inventory or vending machines. Ask how much of that stock is on site, who owns it until it is used, and who counts it. Ask the same about the machines. A buyer should confirm what the business owns and what the customer may expect back. Our page on wholesale distribution businesses covers the general checks.

Purchasing systems and approved-vendor lists

Large customers often order through their own purchasing systems and keep a list of approved vendors. Ask which customers connect that way and what a change of owner means for the listing. The customer may need to approve the new owner. Do not assume it will carry over. Ask the seller to show you the arrangements and, once agreed, speak to the customers.

Value-added services

Kitting, cutting, light assembly and repair add work beyond selling boxes of product. Ask who performs each service, what equipment they use and whether customers would stay if the person left. These services can make a distributor harder to replace, but they also depend on people.

Counter, inside and outside sales

Find out how the work divides between the counter, inside sales and outside sales, and who holds each customer relationship. If one outside salesperson holds the main accounts, ask how the business keeps them after a sale. The lender and your accountant will also have views on how the inventory is counted.