What Is My Distribution Business Worth? Distribution Business Valuation Multiples in 2026

Buyers price a distribution business on a multiple of earnings, then settle inventory and working capital separately in the purchase agreement. Which earnings figure the multiple applies to depends on size.

SDE vs EBITDA by size

Until a general manager runs the business without you, buyers price on seller's discretionary earnings. SDE is net profit plus one owner's full compensation plus documented add-backs. The buyer at this size is an operator who will step into your seat, so your salary is part of what they are buying. Once a management layer runs the company, buyers price on EBITDA, which is SDE minus a market-rate salary for the manager who replaces you.

Keep the two apart. An SDE multiple applied to EBITDA understates value, and an EBITDA multiple applied to SDE overstates it. A buyer who quotes a multiple without naming the earnings figure has not made an offer yet.

Who prices on which figure

At the size covered by the sold-business data below, with SDE between $108,231 and $465,965 at the quartiles, the typical buyer is an SBA-financed individual who will step into your seat and prices on SDE; no linkable source quantifies their share. PE sponsors forming specialty distribution platforms, such as Incline Equity Partners with The Conrad Company and Emerald Lake Capital Management with WECS, and large strategics and infrastructure investors, such as Rexel in its agreement to acquire GCG and Brookfield in its agreement to acquire Gregg Distributors, price on EBITDA and show up for companies large enough to run without the owner.

The asset floor

A buyer also checks your price against net tangible assets. A distributor carries inventory and receivables, and when earnings are thin, those assets set the floor rather than the multiple.

The lender ceiling

When a buyer finances with SBA debt, the lender's rules put a ceiling on your price. Under SOP 50 10 8.1, a business purchase price above $350,000 requires an independent valuation from a Qualified Source, ordered by and prepared for the lender. Total acquisition debt, meaning the SBA loan plus any seller note not on full standby, cannot exceed that valuation. The buyer must also show 1.25x debt service coverage on historical results, the last fiscal year or a two-year average, and projections cannot be used to meet it. Any price above the appraised value has to be funded with buyer equity or a seller note on full standby for the life of the SBA loan.

Small distributors sell for 2.00x to 3.44x SDE at the lower and upper quartiles, with a median of 2.68x, according to BizBuySell's valuation benchmarks for wholesale and distribution businesses sold 2021 to 2025. Larger distributors trade on EBITDA in a different market with different buyers.

The same closed deals show what a company in that range looks like: revenue of $560,143 to $3,029,000 at the quartiles (the upper figure was reported rounded as $3.029M), median revenue of about $1.379M, median SDE of $236,484, and a median sale price of $600,000.

How have wholesale multiples moved year to year?

Yearly averages ran 2.83x in 2021, 2.76x and 2.88x in the following two years, 3.16x in 2024, and 2.86x in 2025, for a five-year average of 2.89x. The publisher's broader industry table gives a 2.93x average for wholesale and distributors over Q3 2021 to Q2 2026, a different window. These are averages, and the 2.68x median is a different statistic, so do not read one against the other. For a wholesale business valuation in 2026, the takeaway is that 2024 was the strongest year of the five and 2025 came back close to the five-year average.

Why did distribution price at 6.0x in H1 2026?

GF Data put distribution at 6.0x trailing twelve-month adjusted EBITDA in H1 2026, the lowest of its sectors and its weakest reading in the series, per ACG's October 1, 2026 recap. That figure covers private equity deals of $10M to $500M in total enterprise value, a different market than an owner with a few hundred thousand dollars of SDE sells into.

The recap gives the reading, not a cause. The buyer reasoning that holds a distributor below other sectors runs on four points:

• You sell products you do not make, so a supplier can reassign the territory or sell direct.
• Inventory and receivables absorb cash, so a dollar of EBITDA converts to less free cash than in a service business.
• Gross margin depends partly on supplier pricing you do not control.
• A buyer has to underwrite the line card surviving the change of ownership.

What does contract durability do to a distribution multiple?

Capstone Partners' April 2026 fuel distribution report puts fuel distribution deals at 9.9x EV/EBITDA, against 8.8x for middle market industrials under $500M EV, and cites recurring revenue and contract durability as the reason. That 9.9x figure is fuel only, and it shows what contracted volume does to a distribution multiple, not what a general line distributor trades at.

Five things move a distributor within the 2.00x to 3.44x SDE range: supplier concentration and line card transferability, customer concentration, recurring revenue, owner dependence, and value-added services. Inventory quality moves the price too, and it is covered in the inventory section below.

Supplier concentration and line card transferability

Supplier concentration matters in distribution because the line card is what you sell. If one manufacturer supplies a large share of your gross profit, the buyer is underwriting that manufacturer's willingness to work with a new owner. In diligence, buyers ask for every distribution agreement and read the term, exclusivity, territory, termination notice, and any assignment or change-of-control clause. In an asset sale the agreement has to be assigned, which can require supplier consent. In a stock sale, a change-of-control clause can give the supplier the same exit. Read your agreements before you pick a structure, because the asset sale vs stock sale tradeoffs go beyond taxes. A buyer can make written supplier consent a condition to closing, and a supplier that will not commit can stall a deal between LOI and close.

Customer concentration

Customer concentration works the same way on the other side of the ledger. A buyer wants revenue and gross profit by customer for each year in the financials, and a large account with no contract gets discounted in the price or moved into an earnout. Supply contracts, pricing agreements, and long purchase histories across many accounts support a higher multiple.

Recurring revenue

Recurring revenue in distribution means contracted supply, vendor-managed inventory programs, and standing replenishment orders: volume that repeats without a sales call. Capstone cites recurring revenue and contract durability as the source of premium fuel distribution multiples. Show a buyer which gross profit repeats under contract or program, account by account, rather than a single total.

Owner dependence

Owner dependence is one reason a buyer moves part of the price into a note or earnout. If you hold the key supplier relationships and the top accounts, the buyer is paying for relationships that may leave with you. A sales manager who owns accounts, and supplier contacts who know someone besides you, reduce that discount. Expect a buyer to ask to meet those people before closing.

Value-added services

Fabrication, automation, and technical sales were highlighted in 2026 platform releases, including Incline's acquisition of The Conrad Company in fluid power and automation and the merger of Value Added Distributors and Exotic Automation & Supply. Services a manufacturer cannot easily replicate by selling direct make your margin harder to take away, which is the core risk a distribution buyer prices. Document each service in your offering materials, with the gross margin it earns, before the first buyer sees your financials.

At the sold-business quartiles, a distributor with $400,000 of SDE is worth $800,000 to $1,376,000, with $1,072,000 at the 2.68x median. This example uses SDE, because a business this size sells to an owner-operator.

Where you land: $400,000 of SDE sits above the $236,484 median SDE and below the $465,965 upper quartile, and $1,500,000 of revenue sits above the median of about $1.379M. Size alone does not move you to the top of the range. Supplier agreements that assign cleanly, contracted accounts, and a manager who runs the warehouse do. The $50,000 of add-backs survives only if each item is documented.

If diligence finds an aging delivery truck or warehouse racking that needs replacing, that cost comes off the price, not off the $400,000 of SDE before the multiple is applied. Only recurring operating costs change earnings.

At a $1,072,000 price, the buyer's lender orders an independent valuation from a Qualified Source, because the price is above $350,000. The buyer injects 10% of total project cost, and up to half of that can be your note on full standby, so 5% buyer cash plus a 5% standby note is common. Inventory is part of total project cost, so it raises the injection dollars. The deal must cover debt service at 1.25x on historical earnings. SBA does not require a quality of earnings report below a $3,000,000 business purchase price. Run your number through the SBA loan calculator to see whether coverage holds at your asking price.

Second example: the EBITDA market

A distributor with $6,000,000 of revenue and $1,600,000 of EBITDA after a $150,000 general manager salary has $1,750,000 of SDE. This example uses EBITDA, because a business with a manager in place is priced on what it earns without you.

The $9,600,000 sits just under the $10M floor of the private equity data, so treat 6.0x as a reference for what institutional buyers paid in H1 2026, not a quote for your company. The SDE quartiles do not fit either, because they come from companies whose upper quartile SDE is $465,965. A company this size sits between the two measured markets, and price is set by how many qualified buyers compete: a PE platform looking for an add-on in your niche, a strategic distributor buying a territory, or an individual with SBA debt and equity partners. An SBA buyer is capped at a $5,000,000 loan and must deliver a quality of earnings report at a business purchase price of $3,000,000 or more, so an SBA buyer at this size needs substantial outside equity or seller financing.

Inventory is included only if the letter of intent says so, and how it is counted matters as much as the headline price. There are two structures. In the first, the price includes inventory at a stated target level and adjusts if the closing count comes in above or below it. In the second, the price covers the operating business and the buyer pays for inventory separately, at cost, based on a physical count near closing.

Either way, the buyer will not pay for stock that does not sell. Expect a physical count, an aging report by SKU, and a negotiation over slow-moving and obsolete items, damaged goods, and stock a supplier will not take back. Write the cost basis, the count date, who performs the count, and the obsolescence test into the LOI.

What is a working capital peg?

A working capital peg is the level of net working capital, receivables plus inventory minus payables and accrued liabilities, that you agree to deliver with the business at closing. Deliver more and the price goes up dollar for dollar. Deliver less and it goes down. The peg exists because a distributor cannot operate without receivables and stock, and a buyer paying a multiple of earnings expects the working capital that produces those earnings to come with the business.

The peg is set from a trailing average of monthly balances. Seasonal distributors need to watch this closely: a peg set on peak-season inventory, with a closing in a slow month, moves money from you to the buyer. Negotiate the peg and the averaging period in the LOI, before diligence starts and before you have stopped talking to other buyers.

For an SBA buyer, inventory is part of total project cost, and the lender treats its value at closing as a diligence item. A larger inventory raises the dollars behind the buyer's 10% equity injection, which can change what that buyer is able to pay at your number.

A distribution sale combines up to four pieces: cash at closing, a seller note, an earnout, and, with private equity buyers, rollover equity. Which pieces show up depends on the buyer and on how much of the value depends on you.

Cash at closing

For an SBA buyer, closing cash comes from the 7(a) loan, up to $5,000,000, with the business acquisition portion amortized over 10 years, plus the buyer's equity. With the prime rate at 7.00% since September 17, 2026, the maximum variable rate on a loan above $350,000 is 10%.

Seller note

A seller note on full standby can supply up to half of the buyer's 10% equity injection. Full standby means no principal or interest payments for the life of the SBA loan. Interest may accrue and is paid after the SBA loan is repaid, documented on SBA Form 155. A seller note that is not on standby counts toward total acquisition debt, which is capped at the lender's valuation, and toward debt service in the 1.25x test, with an interest-only note amortized over no more than 10 years for that test. Ask which kind of note the LOI describes, because a standby note pays you nothing until the bank is paid off.

Earnout

An earnout pays part of the price after closing if the business hits a target. In distribution, tie it to something you can verify: gross profit, or retention of a named supplier line or account. Negotiate the measure, the accounting rules, and your access to the books, because the buyer controls pricing and purchasing after closing.

Rollover equity

A PE sponsor building a platform, such as Incline with The Conrad Company or Emerald Lake with the WECS and Electrical Cable Specialists merger, may ask you to roll part of your proceeds into equity in the combined company. Rollover gives you a second payout if the platform sells later, and it is illiquid until then. Insist that your rollover equity is priced on the same terms the sponsor pays.

Selling with Munera

If your business matches one of our active buyer clients, the buyer pays our fee and you pay nothing, and a matched introduction can produce an offer within weeks. If we run a confidential buyer search, the fee is a success fee paid at closing with no monthly retainer, and a $5,000 engagement deposit is credited against it. Your business is never publicly listed: buyers see a blind profile until they sign an NDA and qualify on capital and fit. Decision to signed LOI runs 3 to 6 months, including 4 to 8 weeks of preparation and 2 to 4 months of marketing, and LOI to close runs 60 to 90 days depending on financing and diligence.