Hello,

I want to give you the summary of our conversation yesterday. We spoke for 3 hours in a restaurant.

Ron the owner had 2 businesses in the past and sold them to his previous partners on seller financing long term contract. Because he trusts them. He has 4 warehouses in Edmonton.

He is the owner of a pallet yard 1.2 acres and the shop 6,500 square feet. He will rent to the buyer for 5,400$ per month and this is very cheap, he wants to sign a 5 year lease.

He buys and sells about 150,000 pallets per year (as of 2023).

He buys 48x40 core pallets (and some other popular sites) for 2$ on average and sells them for 10.50$.

His big suppliers are Amazon, Canada Post( gives many thousands of pallets for free), Safeway, Sobies and other many smaller suppliers. He said he has 8 big clients that supply/sell pallets to him.

He also builds about 10% of new custom pallets per year.

He has 5 permanent employees and other 10 come and go.

He has 10 52 feet trailers and 1 semi truck and one city truck, 2 forklifts, 2 pallets dismantle machines and other tools.

He has about 100 customers/buyers and his drivers deliver pallets every day 5 days a week.

I was surprised that he did not want to receive 1000 pallets per week from big company City Pallets. He said he did not have a room for them. I asked why didn't you rent another yard? -He said he was not interested.

1000 pallets per week is 52,000 per year. And that could be additional revenue of 546,000 per year.

He has not advertised for a long time.

He also does not want to expand and grow ,I guess because of his age, he is 63.

I see lots of potential in this company. Jeff knows how to expand it and is willing to help the new to do that.

I would look at both debt and equity financing. I just need to know what terms and interest are going to be.
What option do you recommend?

Ron mentioned in conversation that receivables this fiscal year at the moment 2 to 2,25 million.
This year numbers are a bit different because he has a full time professional salesman since last October and he brought new business.
Gross expected to be by the end of September 1.5 million and net profit 425k +.
Because of that he changed the price to 1.5 million and does not want to do any seller financing.

Good news that my friend is willing to partner up with me and we can come up with about 600k down payment or more.