The Checklist for Selecting a Financial Advisor

There are literally thousands of “advisors” out there, but only a handful with serious credentials in advising foodservice distributors.  In an industry that operates on razor thin margins, there is little room for error in making your choice.

Below are several situations where owners seek an outside advisor:

•    Growth Strategies – developing sound marketing, operating and financial expansion plans
•    Profitability Improvement – determining customer, product line and vendor efficiencies
•    Performance Benchmarking – assessing your performance against “like companies”
•    Ownership Transition – buying out current partners and/or family members
•    Exit Strategies – creating a plan to maximize the value of the business, near or long term
•    Lender Relationships – examining/restructuring lending relationships and loan arrangements
•    Facility Expansion – evaluating whether to expand, build a new facility or lease one
•    Buying A Business – avoiding the potential pitfalls of buying another business
•    Selling My Company – knowing when to sell and how to maximize the value of your life’s work

We all work in an industry built on relationships and reputations. The advisor you choose should have a solid reputation, well-established relationships, and a track record of proven results for their clients. The checklist below will help you assess potential advisors’ qualifications:

Questions to Ask a Potential Advisor
Overall Issues

➢    How many food distribution companies have you worked with in the past five years?

➢    What size have your clients been in terms of sales, distribution radius and customer set?

➢    How many clients have you advised on exit strategies and financing alternatives?

➢    How do you assess customer, product and vendor profitability?

➢    How would you go about benchmarking key performance indicators of my business against others’?

➢    How large is the database of companies that you would compare me against?

➢    Do you have 3 to 5 references that I can call?

Buying & Selling Experience

➢    How many transactions have you closed in foodservice distribution in the past 3 years?

➢    In how many of those deals did you represent the buyer and in how many the seller?

➢    How many were deals with family-owned businesses?

➢    How many of top ID 50 distributors have you met with in the past year – more than once?

➢    Do you have active relationships with the senior executives at the ID top 10 companies – and if so, how would you characterize those relationships?

➢    What kind of a distributor database do you have and when was it last updated?

➢    Please give me 3 to 5 names of companies that you represented in the past 3 years that I can call to talk about your experience and performance.

➢    What questions would you suggest I ask your references about high points of your work with them?

➢    Please explain how foodservice distribution companies are bought and sold in our current economic environment.

➢    How is seller-owned real estate viewed by different prospective buyers.

➢    Tell me how you would go about valuing my company.

➢    If now is not the time for me to sell, how long will I need to work with you to improve my valuation to meet my sale expectations?

➢    In the past 3 years, how many companies have you coached to help improve their valuation and how many did you sell straightaway?

As you walk through the questioning process, stand firm to your principles.  In many instances, your business represents your life’s work and a large segment of your net worth.  Depending on your particular needs, selecting the right advisor could well be the most important business relationship you ever forge.  It’s not one to be taken lightly.

Keiter Stephens Advisors (www.ksadvisorsllc.com) is the foodservice distribution finance and consulting subsidiary of Keiter, Stephens, Hurst, Gary & Shreaves. They have worked with over 50 privately-held distributors across the country. KSA services include:
•    Mergers and Acquisitions: guiding the sales and acquisitions of foodservice distributorships and regional sales territories
•    Profitability Improvement on both the vendor and customer sides
•    Custom Strategic Services, including transition planning for family-owned
distributors and driving management consensus with KSA’s 3-1-1 Planning Process
•    Custom Finance Solutions, including finance strategy development,
distribution center expansion analysis, lease or buy decisions on real estate
and equipment, and cost segregation studies.


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