DEAL STRUCTURE -- INVENTORY NEGOTIATIONS -- ECOMMERCE

I am negotiating the purchase of an eCommerce retailer. The business is healthy through COVID, but holds a lot of inventory relative to the value of the business. It generates ~$225k but has inventory on hand of between $400-500k. The seller has been very reasonable throughout the process and recognizes the challenge the large inventory amount presents. As a result, he has offered to act as a '"supplier" of inventory to me. Essentially, he would maintain ownership of inventory I deem 'aged' or unnecessary and I would sell it for him on a consignment type of arrangement where he would only be paid if it sells. Does anyone have experience structuring this type of arrangement and would be willing to offer some guidance?

Also, is there a standard for how much inventory should be included in the purchase of the business much like working capital?

Thank you in advance for the help!



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