Produce Distribution Business

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February 06, 2025

by a searcher from Vanderbilt University in Delray Beach, FL, USA

Has anyone had experience in the food distribution or produce wholesale industry? What were your biggest points in due diligence?

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commentor profile
Reply by a lender
from University of Southern California in Los Angeles, CA, USA
From a lending perspective, customer concentration is a huge issue in this industry. The SBA lender will most likely have to underwrite the credit of your major buyers. Just did a deal where the largest customer was 50% of revenue and it was a real drag to get it done. Please let us know if you need help getting SBA financing for this deal. You can reach me here or directly at redacted You can also click here to schedule a meeting with me: https://cal.com/ishan-jetley-3d73m8/30min. Look forward to chatting!
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Reply by a searcher
from The University of Arizona in Gilbert, AZ, USA
Exposure to Paca came up right away for me. Union for drivers as well.

Paca is a big deal if you are big enough and lenders don't like it as it can tie up your money.

Outside of that, there is a lot of cash floating around in this industry. Many restaurants will just buy produce with cash which makes DD a tough process. You likely will be under what the seller knows they can make. If seller has prepared for the sale he might have stopped a few years back. Should give you a good idea if you go back far enough what % of cash flows into the business.
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