Selling A Manufacturing Business
There are basic questions to be asked that are relevant when selling your business. These include important issues such as sales trends, net profit margins and their trends, legal and environmental issues, management depth, concentration of business with a few clients, and strength of competition. However, there are specific issues that selling a manufacturing business has, that selling a distribution business, and selling a service business do not have. These issues include the overall condition of the manufacturing business equipment and the historical capital expenditures, including ongoing equipment maintenance, as well as, atypical capital expenditures. When selling a manufacturing business, you need to also ask yourself, what are the capital expenditures necessary to maintain the existing equipment going forward, and what are the future capital expenditures if growth is indeed the target? A manufacturing business' equipment is critical to its historical cash flow and to the company's future earnings so the purchaser needs to know the anticipated cost going forward. Obviously, if the company has adequately maintained their equipment and to grow the manufacturing business, there is not a need for substantial equipment expense going forward the buyer should be more willing to pay a higher price than for a similar business in need of sizeable future capital expenditures.
Examples of manufacturing businesses that The Montana Group sold: