Selling a Manufacturing Business

Jan 4, 2016

“Made in America” is a phrase that resonates with a large percentage of people that live in the United States. The phrase conveys a mental image of products being manufactured with pride by individuals employed in positions offering compensation that equates to a middle class or higher standard of living. The prior century saw a migration of manufacturing overseas, however changing market dynamics including uncertainty in important cargo shipping channels around the world due to political unrest & military activity, quality issues related to products manufactured overseas, and a political push domestically to create more middle class jobs has created a robust environment for the reemergence of the United States manufacturing sector. This environment has resulted in increased revenues & profits for domestic manufacturing businesses and strong transaction values for entrepreneurs selling manufacturing businesses in the mergers & acquisitions marketplace. IBA has a reputation for providing the highest level of representation available to owners selling privately held companies in the Pacific Northwest. One niche where IBA’s representation services are commonly sought is by entrepreneurs who own manufacturing businesses in Washington, Oregon, & Alaska.

The sale of a manufacturing company is a sophisticated process that requires a business broker with appropriate knowledge, experience, and negotiation/facilitation skill to achieve the best possible outcome in a timely manner after the business has been placed on the market.

Business Valuation
– The first step in the sale of a manufacturing business is to determine the value to offer it to the marketplace. Business valuation is subjective science that requires the expertise of a business broker that understands the accounting models commonly employed to value privately held companies, the market environment for similar companies in the relevant geographic area, and the financing conditions that exist to support acquisitions in the manufacturing sector. All three of these factors are critical components to properly valuing a business for sale. Entrepreneurs are cautioned against having a party value or represent a business for sale that is not active in the mergers & acquisitions marketplace for manufacturing businesses as lack of knowledge of recent completed transactions, the market conditions created by buyer demand, and acquisition financing availability can result in a business being improperly valued. An improperly valued business placed on the market for sale traditionally results in a lower ultimate sale price and a longer time period of exposure on the business opportunity market. Neither of these outcomes are good for an entrepreneur desiring to sell or the company being sold.

Professional Sales
– The successful sale of any product or service requires a presentation that articulates the attributes & benefits of the item to a potential buyer. Professional representation of a manufacturing business requires an individual that can convey the unique attributes of the business, financial history, market niche, and future opportunities presented by the company. If this cannot be accomplished, the company will not sell or will sell at a value reflective of the amount of information conveyed. It is recommended prior to selecting representation that business owners have the party convey to them an overview of their business model and competitive advantages of their business to assess the level of knowledge and sales skills of the individual. It is also important to select a broker that has successfully completed transactions involving manufacturing businesses and has ongoing engagement with the different demographic groups of buyers interested in acquiring companies in the manufacturing sector. A few of the demographic groups currently acquiring companies in the manufacturing sector include companies increasing market share in an existing niche, companies bringing manufactured components in house to control production schedules and supply, private equity firms, and individuals with relevant experience desiring entrepreneurial investment opportunities for direct management. IBA interacts on a regular basis with all of these buyer demographic groups and maintains a database of buyers actively seeking acquisitions in the manufacturing sector in the Pacific Northwest. It is common for multiple offers to be generated in a short time frame for IBA clients from this database in the manufacturing sector. Many of the buyers in IBA’s buyer database are only actively engaged in the mergers & acquisitions marketplace in the Pacific Northwest with IBA based on IBA’s reputation for confidentiality, integrity, and “best practices” in facilitating the sale of a privately held companies.

Experience – The NFL playoffs start this weekend. Russell Wilson, Tom Brady, Aaron Rodgers, and Ben Roethlisberger lead teams into the playoffs with Super Bowl Championship rings on their fingers. All four teams will be difficult opponents in the playoffs regardless of their seeding based the experienced leadership directing the offense. The sale of a manufacturing business also requires an experienced quarterback facilitating sales efforts & negotiations. An entrepreneur that selects IBA to sell their manufacturing company in the Pacific Northwest is hiring an experienced professional playing at the top of their game. Recently completed transactions by IBA in the manufacturing sector include Enclume, a company manufacturing proprietary products for William Sonoma and Crate & Barrel; Elmore Electric, an electric panel manufacturing firm for the marine industry; Remedy Tea, a company manufacturing tea for retail businesses like Whole Foods; Atrium Shade, a company manufacturing awning & shade systems, and Solar Gem Greenhouses, a fiberglass greenhouse manufacturer. It is our promise to our clients that we will get them into the red zone with an opportunity to walk off the field as winners. IBA, with over 4000 completed transactions since 1975 has done that more often for a longer time than anyone else in the Pacific Northwest.

If you are interested in selling a manufacturing business in 2016, I encourage you to contact IBA and learn firsthand why IBA is the firm of choice in the manufacturing sector for business owners wishing to sell their companies at the best market terms in a timely manner.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation in terms of successfully negotiating transactions that are “win-win” in an environment of full disclosure between the parties.