What should I check before buying a food distribution company?

A general wholesaler moves boxes. A food distributor moves boxes that expire, that must stay cold, and that regulators and customers can ask about. That changes what a buyer should look at. Start with the things that lose value on a shelf, then move to the contracts and relationships that keep the trucks full.

Stock, dates and spoilage

Attend the stock count in person. Ask for a report of stock by product and best-before date, and ask how the seller treats items close to their dates. Ask for the history of write-offs, damage and customer returns. An accountant can tell you how stock affects the figures. Ask how recalls are handled and whether the system can trace a lot.

Trucks, cold storage and permits

Have the refrigerated trucks and the warehouse cooling equipment inspected by someone who knows them. Ask for maintenance and temperature records, and ask what licences the business holds to handle and move food. Find out which of them continue after a sale, and ask your lawyer what the licensing authority needs to be told.

Accounts and supplier lines

List the foodservice and grocery accounts, and ask how much of the business rests on a few of them. Then look at the supplier side. Many distributors hold lines from food brands that can be moved to another distributor, so ask what the agreements say and whether those suppliers have been told about the sale.

• Stock count by date, with the write-off history.
• Truck and cooler maintenance and temperature records.
• Customer list with ordering history.
• Supplier agreements and any exclusivity.

For a broader view of buying a wholesaler, see this guide for sellers of wholesale distribution businesses, which shows what a seller is expected to produce.