Description

Major player at the heart of a circular economy that underlies North America’s logistics infrastructure. This broker exploits this fragmented, inefficient market for new and recycled pallets using its decades-old relationships with thousands of retained suppliers across 42 states and a 36-state customer base, fulfilling an estimated 14,000 transactions per year, trading over 7 million pallets.

Key Aspects

A private exchange through which buyers and sellers of pallets trade this renewable resource
Company maintains no inventory, has virtually no CapEx, carries no risk of loss, and has minimal fixed operating expenses
Inflation increases revenue and profit per transaction due to margin-based pricing model
No customer, accounts receivable, or vendor concentration (largest accounts in 2022 = 2.9%, 6.4% and 7.1% respectively)
Significant customer base in agriculture, consumer staples, and other recession resistant industries
Loyal sales team has more than doubled revenue with no personnel changes or additions in the last four years
Sales process results in ability to predetermine gross profit on every transaction
Experience of staff and in-house software enables the company to assist customers in mapping their future needs, developing bespoke pallets, exploring less costly alternatives, and sourcing specific pallet types to meet specific customer needs
Deep bench of suppliers built over decades ensures maximum opportunity to accept orders in times of low availability, shorter fulfillment lengths, and lower delivery expense
Rapid settlement of transactions for suppliers ensures premium access in times of shortages and when quick turn arounds are required
Annual Adjusted EBITDA exceeds $1.5 million per FTE
Deliberate focus on smaller suppliers and smaller customers ensures the broker’s importance in its ecosystem and provides leverage
Well suited for any manufacturing shifts from the northern U. S. to the south

Opportunities

The Company’s solid and consistently growing business that has traditionally focused on recycled GMA pallets provides the perfect platform for strategic and acquisition-oriented partners to pursue new and/or non-standard pallets which, combined, currently represent only 20% of pallets sold
Geographic expansion to the West Coast and several major eastern markets that have been ignored to date
Add additional sales personnel to further penetrate existing territories
Restructure sales team and comp to focus on growth and target larger customers
Update software and digitize files to better mine customer data for re-solicitation and expand the number of accounts manageable by each salesperson
Expand types of shipping and logistics materials being brokered (i.e., packaging materials, containers, clamp loading corrugated, etc.)
Exploit recent turmoil in the market by acquiring less stable, smaller brokers and pallet manufacturers in this highly fragmented market
Broker raw material between wood suppliers and smaller manufacturers

Market

2 billion pallets currently in circulation in the United States, averaging 10 (light-duty stringers) to 66 (heavy-duty block) trips over their lifespan
Domestic market created in 1937 with the invention of the gas-powered forklift and converted to the global standard by World War II
Production of new pallets contracted in 2020-21 due to mill shutdowns and follow-on labor shortages. This coincided with increased demand for palletized shipments as homebound consumers increased their spend on goods (vs. services) during lockdowns. Turmoil continues due to drought, fires, and ongoing logistics blockages.
Inability to reliably fill orders handicapped weaker brokers, increased illiquidity in the market, and allowed stronger brokers to enjoy higher margins. The longer the turmoil continues, the more consolidation the market will see.
Adequate and diverse supply to quickly fill orders, strong customer service, value-add capabilities, and an emphasis on growth will determine the winners and losers in this emerging consolidation

Ownership Objectives

Owner is excited to remain in the business while bringing on a new partner to capitalize on continued scale and execute beyond the company’s current capacity

Personnel

Headcount of 8, with 5 sales professionals, 2 support staff, and 1 part time employee
Over $14 million revenue per FTE
Average tenure exceeds 10 years
No employees are anticipated to depart as a result of the sale; one (non-sales) employee is nearing retirement age

Locations & Real Estate

All operations are run out of a centralized, affiliate owned office (with room for expansion) available for sale or rental
Additional employees, such as regional sales personnel, could be located remotely

Benchmark International

Benchmarks Exclusive Opportunities

Major Markets Pallet Broker- BN000025929

Major Markets Pallet Broker- BN000025929

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