If you are contemplating selling your manufacturing business, obtaining an appraisal should be among your first steps. Doing this will provide tangible goals to work toward for the sale and allow you to set realistic expectations.
Your company’s value will depend on your niche segment, market conditions and growth prospects. Potential buyers are likely to prioritize customers you can retain upon exit as one factor of evaluation.
1. Prepare Your Financials
Business owners decide to sell their manufacturing companies for various reasons. Lifestyle changes, family concerns or simply being disenchanted with running the company could all be catalysts for selling, but regardless of why this decision has been made it’s vital that all parties involved make sure the highest value possible for their investment when selling is made.
First step of this process should be obtaining a professional company valuation. This will provide an accurate understanding of your company’s worth, helping you set an equitable asking price. Also important before selling is starting is making sure all legal issues have been settled; otherwise prospective buyers might be turned off by any unresolved legal matters that come to light during negotiations.
Cleaning up the financial records as part of preparing to sell your manufacturing company is also key in getting ready to sell it, including tax returns and accounting records. Aiming for this goal 1-3 years before selling can make for an easier transition.
Finally, make sure that you network within your industry to find potential buyers for your manufacturing business. Networking will enable you to connect with individuals who are truly interested in purchasing it.
Once all these steps have been completed, it’s time to list your company for sale. Be patient as you go through this process and keep emotions under control; at its completion you will feel an incredible sense of freedom and accomplishment! Just don’t forget about taking care of yourself post-sale!
2. Create a Marketing Strategy
Crafting and maintaining an effective marketing strategy is vital for any manufacturing business, not only because it will ensure they produce top-quality products but also to attract new customers while strengthening existing ones, leading to higher sales and brand recognition.
Before embarking on any marketing strategy, it is crucial that you have a firm grasp on your desired goals for your business. Doing this will enable you to set SMART goals that align with overall company objectives – such as revenue targets, introducing new products or increasing market share – while making sure marketing objectives support such goals within available resources and capabilities.
An effective marketing plan is also key to increasing your chances of selling your manufacturing company in the future. Showing evidence that it is growing and flourishing will make your manufacturing firm much more attractive to potential buyers, while creating an engaging sales proposal should highlight all its unique assets that could be leveraged by new owners is also useful.
As well as creating an effective marketing strategy, networking is another effective strategy to use when selling a company. Not only can networking help identify prospective buyers but it’s also an opportunity to share knowledge of your industry while creating relationships with prospective buyers.
3. Hire a Broker
Your manufacturing company was likely started for various reasons, from starting up a new venture or retiring; one thing remains certain; when the time comes, you want to extract maximum value from selling.
To do so successfully, it’s crucial that you hire a broker with relevant experience and skills. Ideally, a business broker for manufacturing companies should possess significant manufacturing industry expertise as they will understand how best to navigate the unique challenges associated with selling a manufacturing business. In addition, your chosen broker should possess a large network of potential buyers as they go the extra mile in promoting your company to generate interest among qualified prospects.
When selecting brokers, be sure to read testimonials from past clients as a barometer of satisfaction. Also be sure that they have an established track record in successfully connecting manufacturing businesses with buyers. Lastly, select a broker with an excellent grasp of the sales process who will keep you up-to-date throughout its entirety.
Once you’ve secured an experienced broker, they can assist in valuing your manufacturing business. By considering its financials and any major capital investments made recently, an accurate estimation will be reached.
Once this information has been compiled, they’ll use it to assist with finding a buyer and negotiating terms of sale. Once the deal has been finalized, they’ll assist with transferring ownership and making sure all necessary documents are complete – leaving you to enjoy newfound freedom knowing you got maximum value when selling.
4. Organize Your Team
One of the greatest mistakes business owners make when it comes to manufacturing companies for sale is not starting their preparations early enough for sale. Prep work must begin years ahead of when you plan to sell.
Attracting buyers means consulting an accountant who will assist in making adjustments that will make your business more attractive to buyers (as seen here), including altering tax advantages or shifting towards bottom-line earnings and growth strategies. Furthermore, key employees may need to be replaced so you can delegate tasks more easily while focusing on marketing initiatives.
Train someone else to fill your role, particularly if you have been the primary contact between customers and your manufacturing company. Buyers may become alarmed if left with only one point of contact for any problems that arise; having an effective manager or staff member take on these duties can demonstrate that your manufacturing business is more than just you alone.
Preparing to sell your manufacturing business can be an intricate and lengthy process, yet crucially essential if you hope to maximize its worth. By following these tips, you can increase its worth and ensure it continues long after you leave. Get in touch with Acquira now so we can assist with this journey and help estimate its worth using various valuation techniques as well as provide advice and support during its completion.
5. Make a Plan for Growth
When the time comes to sell your manufacturing business, you want it at its highest point. One way of accomplishing this goal is through steady growth over time – doing this will increase its profitability and value significantly.
However, it’s important to recognize that not all growth is equal. A potential buyer will likely prefer purchasing a business with consistent revenue and profit growth because this indicates a more secure business model which is likely to remain profitable post-sale.
As a business owner, it’s essential that you document all of the operating procedures and financials for your manufacturing business in order to facilitate an easy evaluation and valuation of its value by prospective buyers.
Make sure all capital expenditures for your business are documented and up-to-date, which will enable your broker to accurately estimate its value. Also ensure your tax information is current. Make sure that all employees still have a substantial time left on their employment contracts so as to maintain loyalty to the new owner and not leave post-sale. Network within the manufacturing industry to identify individuals that might be interested in purchasing your manufacturing business. Doing this will increase its exposure and boost its chances of a successful sale.
