The reported margin included a rebate earned on the combined purchases of three affiliated locations. The deal was only buying one of them.
Short answer
Only if it can qualify for a rebate tier on its own purchasing volume. If the reported margin includes a supplier rebate earned on the COMBINED purchases of several commonly owned locations, and the deal is only buying one of them, the rebate agreement’s tier thresholds — and any change-of-control clause tied to the corporate group — can mean the target alone no longer earns the same rate the instant it leaves common ownership, even though its own purchasing behaviour has not changed at all.
No statute governs a supplier rebate’s tier structure; it is a matter of the rebate agreement’s own terms with the supplier — including whether it is priced on group volume, unit volume, or the specific legal entity, and whether it contains a change-of-control or common-ownership condition that is triggered the moment one location leaves the group that earned the rate.
Before pricing the deal on the target’s reported rebate-adjusted margin, get the supplier’s written confirmation of what tier the target ALONE will qualify for standalone, post-closing. Pricing on the group-earned rate the target itself did not independently generate overstates the standalone margin the buyer is actually acquiring — the rebate agreement’s own tier schedule, not the target’s historical books, decides whether that margin survives the carve-out. Read the change-of-control language specifically: some rebate agreements simply re-tier the surviving location automatically, others treat any one location leaving common ownership as an event that ends the arrangement entirely, and the two outcomes are not the same diligence finding even though the target’s own historical numbers look identical either way.
See it decided in the volume-rebate continuity case file, the MFN clause file and the seven-years-of-non-recurring add-back file.
A 30-minute call is enough to tell you whether your numbers hold up.
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