Comfortable Concentration for a $800k SDE Business

And, you know, do I even know if this business can support itself? You know, do the, do they collect the money fast enough? You know, how are they paying their suppliers and are they turning the inventory quick enough?

And so I'm talking to him on the fly and, you know, he's not in front of a computer. He's just asking me. He's like, okay, so what was the AR at the end of the year and what were the sales?

Phil, these are all questions that are sort of distribution business specific. These are kind of KPIs that you use to assess a distribution business, in particular, an inventory business. Is that what we're, what we're hearing here?

Yeah, I think the, I mean, the turns, for sure. Inventory turns in, In a distribution business, your business is your inventory, right? And how quickly or not quickly you're able to turn it.

So I think we were quickly able. He was quickly able to see, okay, you're. They're turning the inventory six, seven times A year, which is kind of, you know, if I had done a Google search, I probably would have found that's.

That's a good amount for a distribution business. But I didn't know. I actually didn't. I didn't. I didn't know what was good and what wasn't good. So, you know, he. He kind of gave me the confidence to take the next step and say, okay, this, this is worth digging into.

You know, why don't you create a. Create a model and, and. And see how, you know, it looks, you know, from a cash flow perspective.

And then. So, so we did that and, you know, then I arranged it.

Phil, let me, let me stop you there. Let's explain a little bit more about what the business does. Yeah, so it's a wholesale distributor of paint for automotive.

So paint that ends up in body shops on repairing damaged cars, painting over the repaired cars. And much of the paint that's coming in is from a single manufacturer.

That's correct, yep.