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This is an established Midwest plastic recycling and toll processing company founded in 1999, specializing in post-industrial plastic recycling, pelletizing, grinding, and material recovery. Rather than buying and reselling commodity plastic (a business exposed to volatile resin prices), the company earns fees for processing material that industrial manufacturers already own. That toll-processing model is the important detail here: it converts a commodity business into a service business with far more predictable margins and lower balance-sheet risk.
The company runs out of a 30,100 square foot industrial facility inside the Midwest manufacturing corridor, employs 19 people (16 full-time, 3 part-time), and includes $350,000 of specialized FF&E plus $40,000 of inventory in the asking price. It serves a diversified base of industrial manufacturers on a recurring, fee-based basis, which the seller explicitly cites as reducing commodity price exposure. Revenue is $3.3M with $554,438 of seller cash flow, a 16.7% SDE margin, and the deal is priced at $1.3M, roughly 2.34x cash flow.
The business is lender pre-qualified with $425K down, and the owner is selling to retire. The real estate is offered separately at $1,150,000, and buying it would raise TTM SDE to $651,438 (reflecting rent add-back). At the base price, this is a clean going-concern acquisition of a niche industrial service with regional moats built on turnaround time, processing capability, and customer relationships.
Why we like it
- The toll-processing model is the whole thesis. Because the company charges fees to process material customers already own, it sidesteps the resin-price swings that wreck typical plastics recyclers, producing a 16.7% SDE margin on $3.3M of revenue and $554K of consistent cash flow. That is a service business wearing a manufacturing costume.
- Recycled plastic demand has structural tailwinds. Corporate sustainability mandates, recycled-content regulations, and supply-chain reshoring all push more post-industrial plastic toward regional processors like this one. This is not a fad category, it is a slowly rising floor of demand.
- The moat is regional and relationship-driven, which is exactly what you want in a boring industrial. Competition is based on turnaround time, processing capability, and service quality, not price, meaning entrenched customer relationships are sticky and hard to poach. A 25-year track record deepens that switching-cost advantage.
- The entry price is disciplined and financeable. At 2.34x cash flow with lender pre-qualification and only $425K down, a buyer can control a $554K earnings stream with modest equity. That is strong downside protection if the customer base and margins verify in diligence.
How to improve it
- Audit the customer concentration and lock in the top accounts. With 19 employees and a diversified but regional base, the first 90 days should be spent quantifying revenue by customer and converting the largest relationships into multi-year toll-processing agreements. Contractual commitments turn implied recurring revenue into real recurring revenue and lift the exit multiple.
- Push capacity utilization on the existing equipment. The facility already houses $350K of specialized grinding and pelletizing gear, so the fastest margin gains come from running more volume through paid-for machines. Analyze shift schedules and downtime, then add a second shift where demand supports it before spending any capex.
- Formalize a business development function. The listing flags growth through increased business development effort, which usually means the retiring owner was the sole rainmaker. Hiring or promoting a dedicated sales rep to systematically call on Midwest manufacturers is a clear, low-cost lever to fill open capacity.
- Expand the service menu around material recovery. Adding capabilities like custom compounding, color sorting, or higher-grade pelletizing lets you charge premium toll rates to the same customers. Cross-selling existing relationships is cheaper than winning new logos.
- Model the real estate decision carefully. Buying the building at $1,150,000 raises SDE to $651,438 by removing rent, but ties up capital and adds a landlord role. Run the numbers on owning versus a long-term lease with renewal options, and only buy the RE if the return on that incremental capital beats redeploying it into the operation.
- Institutionalize the owner's knowledge before he retires. Document pricing formulas, vendor relationships, and processing specs while the seller is still available. Reducing key-person risk is essential given the owner is exiting and the sale reason is retirement, not a management-team handoff.
Diligence notes
- Verify the recurring, fee-based revenue claim with actual invoices and contract terms. Confirm what share of the $3.3M comes from repeat toll processing versus spot jobs or any commodity resale, because the entire de-risked thesis rests on the fee model holding up. Pull two to three years of customer-level revenue to test stickiness.
- Scrutinize customer concentration and contract length. A regional processor with 19 employees can easily have one or two accounts driving a disproportionate share of cash flow, which would materially change the risk and the price. Identify how much revenue walks if the top account leaves.
- Inspect the $350K of specialized equipment for age, condition, and deferred maintenance. Grinding and pelletizing lines are capital-intensive and expensive to repair or replace, so a walkthrough with an independent industrial appraiser is essential. Understand the near-term capex needed to keep the line running at capacity.
- Confirm the SDE bridge and the real estate add-back math. The listing shows base SDE of $554,438 rising to $651,438 with RE included, so verify the rent add-back and normalize for any owner-specific expenses. Also confirm the TTM ending June 2026 figure reflects actuals, not projections.
- Review environmental and regulatory compliance. Any plastics processing operation carries potential permitting, air-quality, and waste-handling obligations, and inherited liabilities can be costly. Order an environmental review of both the operations and, if buying, the property.
- Assess the labor situation and management depth below the owner. With the owner retiring, understand who runs day-to-day operations, whether key employees will stay, and what the wage structure looks like across the 16 full-time and 3 part-time staff. A thin bench is the single biggest execution risk in this deal.
Source
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