Buying an industrial supply distributor in South Florida

• Authorized supplier lines in writing, with territories and terms that can survive a change of owner.
• Many customers, none a large share of sales.
• Margins (what's left after the cost of goods) that hold up, set by a pricing system, not each salesperson's gut.
• Inventory that sells regularly, with little dead stock on the shelves.
• Salespeople with long customer relationships who are likely to stay, paid to reward profit, not just sales.
• An inventory and accounting system that tracks costs, stock levels and what each customer buys.
• Services that keep customers loyal: repairs, assembly, or managing stock at the customer's site.

• Supplier agreements: length, how they can be ended, territory, and whether a new owner needs the supplier's consent. Losing a major line can cost a large share of sales.
• Inventory: a physical count, how long items have sat, and how slow-selling stock is valued in the price.
• Sales and margin by customer, and how much rides on the biggest few.
• Overdue customer bills and bad debts; contractors can be slow payers.
• Supplier rebates and incentives, and whether they depend on volumes the business may not keep.
• Sales tax filings and exemption certificates. Missing certificates can become tax bills after an audit.
• The warehouse lease, and the condition of trucks, forklifts and racks.

• Which supplier lines matter most, and have you told them you might sell?
• Who are your biggest customers, and who looks after each one?
• How much stock hasn't sold in a year?
• How much of your profit comes from supplier rebates?
• What do customers buy from you that they can't get quickly elsewhere?
• Which salespeople would customers follow if they left?
• How has online competition affected you?

South Florida covers Miami-Dade, Broward, Palm Beach and Monroe counties: Miami, Hialeah, Doral, Fort Lauderdale, Hollywood, Pompano Beach, West Palm Beach, Boca Raton, Jupiter, and the Florida Keys down to Key West. It's the state's largest metro area and its most international. PortMiami, Port Everglades and Miami International Airport tie the region to Latin America and the Caribbean, which supports a deep base of wholesalers, freight forwarders and logistics firms, many of them near the airport. Tourism and cruises, finance and wealth management, health care, real estate and construction carry much of the rest. Palm Beach County adds wealthy seasonal residents and, out west near Lake Okeechobee, sugarcane and vegetable farms. In the Keys, nearly everything turns on visitors, fishing and boating.

Companies that serve homes, condo buildings and other businesses do well here: the building trades, property services, insurance agencies, medical and dental practices, and professional firms.

Costs run high: commercial rent, wages and, above all, property and windstorm insurance. Price the insurance before you make an offer, not after. Miami-Dade and Broward make up the Florida Building Code's High-Velocity Hurricane Zone, with stricter rules for roofs, windows and structures. That raises building costs, and it also gives steady work to the contractors who know those rules well.

Much of the workforce and many customers speak Spanish as well as English, and a company that works well in both languages has an edge. The winter season matters more in Palm Beach County and the Keys than in Miami. In the Keys, the cost of housing makes hiring and keeping staff one of the hardest parts of running a company. Ask any seller there how they find workers and where those workers live.