Who Buys a Manufacturer
- Larger manufacturerWants capacity, customers and skilled workers to add to its plants.
- Private equity or search fundLooks for steady earnings of roughly one million dollars or more.
- Industry insiderKnows the product and customers and needs financing.
Customer Concentration Comes First
Many small suppliers sell to a handful of larger companies. If your top one to three customers are more than about fifteen to twenty percent of revenue, buyers may discount the price by about that share or walk away.
A business tied to one contract can become unsellable if that customer is acquired, so diversify years before you list.
What the Earnings Look Like
Companies with about one million dollars or more in profit can attract private equity style buyers, who often pay a higher multiple than individuals. Smaller shops sell on owner earnings at roughly two to three times.
Equipment and Maintenance
Buyers inspect machines and read repair logs. In equipment heavy businesses they may haircut depreciation add backs and deduct a share as maintenance capital spending. Keep records current.
Inventory and Working Capital
Heavy inventory compared with earnings can break bank financing. Right size it before listing and expect a buyer to ask for a physical count before closing.
People and Process
Skilled machinists and quality staff are the hard part to replace. Show training records, written procedures and who runs production when you are away.
Quality and Compliance
Certifications and customer quality records matter in supply chains. Collect them early, since a buyer's lender will ask.
Next Steps
Read asset sale or stock sale and selling a business that owns its building. Then find your sale price.