Buying or selling a building materials distributor comes down to a yard a buyer can count, contractor accounts that reorder without your cell phone, and vendor lines that will reopen in a new name. What trades is transferable gross profit after a real counter and outside-sales wage, receivables that match the bank, and inventory that is not last year's dead stock at full cost. A lumber and drywall yard, a specialty roofing or siding house, and a cash retail counter that also sells to the public are different businesses. Price a busy spring as if it were the monthly run rate and you will use the wrong multiple.
The short answer: an owner-operated yard, where you still buy the loads and call on the top builders, often trades around 2x–3.5x Seller's Discretionary Earnings (SDE) after a real sales wage. A branch with a second seller, a yard lead, clean turns, and more than one vendor line can move toward 2.5x–4.5x SDE. A managed branch can be read on adjusted EBITDA. The check is not the multiple. Inventory, receivables, and vendor payables change the cash at closing. Those ranges are directional. They are not a quote.
This guide is for building materials distributors — lumber, drywall, roofing, siding, and the related yard that supplies contractors. It is a narrower file than the wholesale distribution guide and sits next to the industrial supply guide. A warehouse that only stores someone else's freight is a warehouse. A hardware store that sells mostly to homeowners is retail. If those lines share an entity, split them.
Yards that sell well have turns a buyer can tie to the stacks, a second person who already calls on accounts, and mill or manufacturer agreements that say what happens on a change of control. Yards that sell poorly are weathered inventory at full cost, one builder at a third of sales, and terms that are really your personal guarantee.
This article is not legal, tax, or credit advice. Lien rights, contractor credit, and what a yard must carry change by state. Confirm them with qualified counsel before you sign a letter of intent.
Start with a confidential business valuation.
Why a Building Supply Yard Is Different
A yard sells material on a job date. Several facts change the price:
- The inventory is outside. Lumber warps. Bags get wet. Buyers will not pay full cost for a stack you have not counted this month. A spring buy you are still sitting on in November is a cut.
- Builders fail and they also concentrate. A good custom builder can slow down. A production builder with a dozen starts can be a quarter of the book and can move yards. Name both.
- You may be the buyer and the collector. If the superintendent texts you for the load and for the bill, that is key-person risk. A transferable yard has a seller and a yard lead the account already knows.
- Vendor lines do not follow the stacks. A mill may have appointed you. Credit limits often sit on a personal guarantee. Stock does not transfer the line.
- Delivery is a cost. A boom truck, fuel, and a driver wage you skipped in the add-backs will come out. A route that only works because you still dispatch the short loads is a job.
Contractor wholesale and retail cash at the counter do not share a margin. Split them. A specialty roofing house is not a full lumberyard. Say which yard you run.
What Buyers Underwrite
The account list
The account list is the asset. Buyers want the top builders, the share of sales, the terms, who places the order, and whether there is a credit application or a handshake. One builder at a quarter of revenue is concentration even when the relationship feels old. Lien waivers and past-due accounts belong on the same page.
The yard count
The yard count is species, size, and condition, not a computer quantity you have not walked. Buyers and lenders will not finance a number they cannot tie to a bunk. Special-order material for a job that died, and damaged units, come off before anyone multiplies earnings.
Receivables and rebates
Receivables and rebates are the working capital. Contractors pay slowly. A year-end rebate from a mill is not monthly gross profit. Freight you absorbed to keep a builder is not a one-time courtesy if you do it every month. Personal guarantees on payables belong on the same page.
Trucks, the yard, and the dirt
Trucks, the yard, and the dirt are titles, liens, and who owns the land. A boom truck on a note comes out of proceeds. If you own the property, price it apart, with a rent a tenant would pay. Mixing the mortgage into the yard profit is how both numbers get cut.
What Is Actually Recurring
Standing orders from a production builder can look like a contract. Read the notice. Many can move to another yard on a phone call. Price that book as recurring only for the habit you can prove. Buyers who have owned a yard will do this math in the first meeting.
Program work — a national builder, a government spec, a written supply agreement — can support a loan when the agreement will survive a new name. Ask before you treat it as recurring revenue a buyer will fund.
A spring building season in the North and a year-round market in the South are both real. Neither is a monthly average you take from May. A Florida roofing season after a storm and an Ohio framing season are different calendars. Two years of sales by line — lumber, sheet goods, roofing, specialty — are the file.
How Buyers Value a Building Materials Distributor
Start with a real valuation. Then walk the yard.
Seller's discretionary earnings
Seller's discretionary earnings still clears most owner-operated yards. Owner pay and true one-offs come back. A market wage for the buying and the selling you still do does not. Rebates and delivery you gave away to keep an account belong in the margin the buyer will actually collect.
Adjusted EBITDA
Adjusted EBITDA is for a yard that already has a seller, a yard lead, and a book that is not one builder. Turns, damaged stock, and whether the mills will ship the buyer move the multiple. Inventory and receivables are working capital. They are not a reason to apply a higher multiple to the same earnings.
Who Buys, and How the Purchase Gets Financed
Operators buy a yard so they can stop building a book from zero. They can sell a load. They still need vendor credit in their name and a wage that assumes they are not you.
Larger distributors and dealer groups buy a geography or a product line they do not have. They underwrite whether the builders will stay and whether your mills will appoint them. They walk when the inventory will not count or one builder is the company.
Most independent yards are Main Street until a second seller and a clean count say otherwise. Price them that way.
SBA 7(a) can be part of the acquisition when the accounts are real and a lender will lend against inventory that can weather. The 7(a) cap is $5 million. The constraint is often equity for the stock and the receivables. SBA 504 can finance the land, the buildings, and long-lived equipment. It does not finance a customer list. The packet is the one in working with an SBA lender and the 2026 SBA financing guide.
Seller financing is common when you are still the one the supers call, or when the yard true-up is uncertain. Earn-outs show up when one builder can leave. An earn-out that only pays if you keep the route is a job.
Diligence and the Year Before You List
Builders and mills should not hear about a sale from a listing site. The same rules are in how to sell your company confidentially. Prepare with our due diligence guide and the 12–36 month roadmap.
Use the year. Put a seller on the payroll. Count the yard on a schedule you can defend. Split contractor from retail. Call the two largest vendors about a change of control before you set a close date. A credit hold in week one is how a smooth signing becomes an empty boom truck. Damaged stock, rebates, and a delivery bill you treated as an add-back quietly reprice the yard.
What a Buyer Will Ask on the First Call
They will ask which builders are real, which bunks will not sell, which mill will still ship, and who takes the order if you are on vacation. Bring a one-page pack: top ten accounts, top ten vendors and whether the guarantee is personal, a turns number, and the name already on the counter.
The first offer usually prices the company and then reserves the inventory. Read that reserve. Agree on aging, damaged units, and special orders. Do the same for receivables. A builder that pays in seventy days is working capital the buyer has to fund. Personal guarantees come off only when the vendor says they do.
A cash counter and a routed contractor yard can both be good businesses. They cannot share a listing story. Either way, the count of the stacks comes before anyone talks about a multiple of earnings.
Fuel, tolls, and a driver wage for the short loads you still dispatch belong in the same pack so the multiple is not sitting on a courtesy. Special-order trusses and a takeoff you have not delivered should be named, with who owns the material if the job dies. A will-call counter that shares the yard should be its own column, or contractor margin will be blamed for retail waste. Count that counter on the same day you walk the bunks. Lien waivers you owe a builder, and lien rights you still have, belong in the file a lender can read without a second visit. A spring you annualized, and a storm month of roofing you treated as the new run rate, will be pulled out. Put two years by month in the packet so the buyer does not have to build that view from invoices. Mill lead times and a load already rolling on closing day need a sentence: who owns it, and who pays the freight. Broken units and a special order the contractor canceled should be written down before the count, or the buyer will write them down after. A yard you can walk in an hour still needs that list. The walk confirms the list. It does not replace it. Count the broken units on the same day you walk the bunks.
Talk With Bridge Point
If you are preparing to sell a building materials distributor — or you are a buyer who can hold the lines and run the yard — Bridge Point Business Brokers can help you value the book and run a confidential process. Start with a valuation or contact us at (352) 515-0226.
Frequently Asked Questions
How is a building materials distributor valued in 2026?
An owner-operated yard often trades around 2x–3.5x Seller's Discretionary Earnings after a real sales wage. A branch with a second seller, clean turns, and more than one vendor line can move toward 2.5x–4.5x SDE. Inventory and receivables change the cash at closing. These ranges are directional only — not a quote.
Is the lumber included in the price?
It is usually trued up at close, not buried in the multiple. Damaged and dead stock comes off. A computer quantity you have not walked is a cut.
Do contractor accounts transfer?
Only if the builder keeps ordering. Most are not long contracts. One builder at a quarter of sales is concentration. Ask, carefully, before you treat the book as locked.
What about mill lines and personal guarantees?
A mill may have appointed you, not the company. Guarantees come off only when the vendor releases them. Call the largest lines before you accept a close date.
Will SBA finance a lumber yard?
SBA 7(a) can be part of the deal when the accounts support debt service. The 7(a) cap is $5 million. Inventory often means more equity. SBA 504 can finance the land and buildings. It does not finance the customer list.
What quietly reprices a building supply yard?
Weathered inventory at full cost, one builder, rebates treated as monthly margin, a boom truck only you dispatch, and a vendor line that is really your signature.
How can an owner increase value before a sale?
Put a seller on the accounts, count the yard on a schedule, split contractor from retail, start the vendor conversation early, and obtain a professional valuation 12–36 months before you go to market.
Ready to Take the Next Step?
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