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Preparing to Sell a Manufacturing Business

For decades, manufacturing businesses were the backbone of the U.S. economy. No matter what product is being made, manufacturers must be able to be flexible and respond to changing conditions in the marketplace. It is a challenging industry that requires a balance of free market savvy and regulatory compliance.

When the time comes for the business to be put up for sale, a unique, new set of challenges arises in order to maximize the value of the business. While many times buyers will focus on a company’s intangible assets, there are certain steps that can be taken with tangible assets to ensure the sale goes smoothly.

Market Positioning

Most times, a manufacturer knows months and sometimes years ahead of time that a sale will eventually be made. To attract buyers, it’s critical to position the company as favorably as possible leading up to the sale. By capturing the highest possible percentage of the market share, a business can be looked at by potential buyers as a real value.

Condition of Company Assets

Tangible assets are arguably a manufacturing company’s most important assets, so having regular maintenance schedules for equipment can go far in preparing to sell the business. The major advantage to having regular maintenance schedules is that machinery and other vital equipment can be appraised at much higher values, which will not only lead to a better selling price but also make the company more attractive to buyers. However, companies must remember to maintain detailed maintenance records in order to support the equipment’s valuation.

Technology Upgrades

Because so much of today’s manufacturing depends on technology for its success, prospective buyers will look at the state of the company’s technology very closely when considering whether to purchase the business. Therefore, it’s a smart move for a manufacturer to invest in up-to-date technology prior to putting the business up for sale. While this may sound like a large amount of money to spend on a business that will be sold, more often than not the cost of upgrading will be recouped in the sale price.

While some of these steps may sound as though they are too expensive and not worth the effort for a business that will be sold, they are in fact extremely important and often necessary to sell the business at a fair price and in a timely manner. By taking these steps, sellers of manufacturing businesses will be pleasantly surprised at the results.

Consult a Business Broker

We have enjoyed working with several manufacturing and fabrication businesses over the past few years. The market remains strong, with interested buyers from Florida to Ohio contacting us about opportunities in the Nashville, Atlanta, and Birmingham markets. Before you list your manufacturing or fabrication business, consult with a business broker to find out what your real market value is. If it’s not what you expect, we can help you maximize that value by preparing accordingly. If the price looks good, then we can handle the entire business selling process and send you off to a happy retirement or exciting next venture.

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