Comfortable Concentration for a $800k SDE Business

Slim.

There's a lot to like, but there's a lot to talk yourself out of it.

You know, the revenue was around 4 million. A little less business buyer fit, I thought was probably the best business that I had found. You know, having that, spent that time at the steel importer and master distributor.

You know, this was basically that, but a smaller, smaller company, different commodity. And, and the, and the DSCR was good. I think on the concentration side, you know, Roman had been working with Fleetwood the importer and Mipa, the manufacturer in Germany for like 20 years, I think maybe 25 years.

And so that relationship was really long and strong. And then on the same side, on the customer side, these customers had been customers of Romans for 10, 15, 20, 20 plus years. So I felt like that bond was really strong.

And also the customers that Roman has, 95% of what they sell is product that comes from Roman. And you know, they're not buying like half for me, half from somebody else that sells a different brand of paint or a quarter or whatever. So, so we're all kind of really tightly, you know, inter.

Interlocked here in this, in this chain. And some might, you know, I, I did look at some businesses that had customer concentration where it was like a lab company and they were selling to a university, but then the next year they maybe didn't have that university customer. So like, that to me felt different than this where like these customers had been customers for, for many, many years.

And yeah, and their, you know, their body shops that they're selling to were used to this particular brand of paint and they liked it. And you know, so there was a strong stickiness element or factor in there.

Yeah. I'm reminded of another recent interview about distribution and I, my, I'm gathering that in distribution businesses often there's supplier concentration because you're basically the distributor for a particular manufacturer. So this isn't an unusual dynamic actually in the world of distribution. Is that, is that, am I, am I overstating?

I think it's not unusual. I think if I was going to paint my perfect distribution company to buy, I'd probably have three suppliers. Like, instead of having one that's 70 or 80, I probably have, you know, three that make up that majority of, let's say, the paint.

You know, it's, it's a little bit, it's definitely not, you know, comfortable. But you know, we, you know, I don't really sleep over it anymore. So we're past that stage.