Major Markets Pallet Broker

Midwest US
Industrial & Manufacturing
Client Code: BN000025929
Revenue (TTM): $99,611,843
EBITDA (TTM): $9,289,013

Major player at the heart of a circular economy that underlies North America’s logistics infrastructure. This broker is able to exploit the fragmented, inefficient market using its decades-old relationships with thousands of retained suppliers across 42 states and a 36-state customer base, fulfilling over 14,000 transactions per year trading approximately 8 million pallets.

Key Aspects

• A straight brokerage model – no inventory, no capex, no risk of loss

• Inflation increases revenue and profit per transaction due to commission-based pricing model

• No supplier or customer concentration (largest accounts in 2022 = 7.0% and 5.6% respectively)

• 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

• Strong customer and matching supplier base from the Rockies to the Atlantic seaboard ensures no risk of buying higher than the sale price on any specific transaction

• Deep bench of suppliers built over decades ensures maximum opportunity to accept orders in times of low availability, shorter fulfillment lengths, and less delivery expense

• The importance of faster payment terms to suppliers ensures premium access in times of shortages and when quick turn arounds are required

• Annual EBITDA exceeds $1 million per employee

• Minimal seasonality

• 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

• Ideal platform business with extensive add-on opportunities

• Company is investing in new website and SEO launching by year end to increase inbound sales opportunities

Opportunities

• Expand to West Coast

• Fill in 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

• Explore expansion of marketing efforts targeting larger customers

• Attack the scrap pallet market to expand control over supply in key regions or nationally

• Update software and digitize files to better mine former customer data for re-solicitation, 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 in this highly fragmented market

• Purchase small pallet manufacturers who have difficulty accessing sufficient raw materials and/or reaching the market

• Broker raw material between wood suppliers and smaller manufacturers

• Logical tie in with a container brokerage business or any business that is a heavy user of pallets

Headquartered

US Midwest

Current Markets

• 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

Potential Markets
Real Estate

• All operations are run out of a centralized, affiliate owned office (with room for expansion) available for sale or rental

• Alternatively, business may be relocated