Hey Searchfunder Community-

I'm seeking feedback on a deal that we’re looking at buying for my wife. The business has been around for 12 years, it’s run remotely by a husband and wife team, no other employees. The husband does sales and logistics (40 hours per week), the wife helps with admin work (20 hours/week) and they’re wanting to retire. They import products (one product-many different shapes/sizes/variations) from India and have a third party here in the US assemble, package and deliver the product to their customers (big box retailers), so they don’t touch any of their products. The asking price is $2,000,000 with $150K of inventory included. SDE has been adjusted for one of the owners.

2023 Revenue-$6,900,000 SDE $800K

2022 Revenue-$7,010,000 SDE $565K

2021 Revenue-$8,750,000 SDE 625K

The bad part, one customer makes up 80% of their sales! Also, they only have one agent in India that sources products from 20 different vendors and they only have one vendor here in the US for assembly.

With the contracts they have in place with the big box retailers, they think (and I think I agree) it would make more sense to structure this as stock sale (LLC).

We think we can grow the revenue and reduce, not eliminate some customer concentration.

With that much customer and vendor concentration, how would you go about structuring an offer that would be a win win for both parties? Let me know what other information I left out that would be helpful. Thanks