I have served as a financial analyst to CFO of six different entities with various manufacturing
operations. I also have bought and sold many such businesses over the last thirty years.
Follows is a baker’s dozen of questions you need to have answers to for the marketing and sale
of your manufacturing businesses. (Get prepared before you are ready to sell, I never want to
be behind the Buyer on questions like these.)
- Are your accounting records current and accurate, especially Inventory?
- Do you have a reasonable amount of inventory on hand, or have you been a pack rat
with way too much inventory, some of which may be obsolete? - Are the products you manufacture state-of-the-art or have some other unique feature(s)
that makes the customer base want to buy your products? - Is your equipment up-to-date and well maintained, including the latest updates available
for such equipment? - Do you have a seasoned, experienced workforce with minimal turnover. Do you have
non-compete agreements? - Is your workforce well paid and you have kept up with market salary increases?
- Do you have benefit programs in place?
- Are you a non-union or union shop? Both are saleable, but each group has points of
concern for the Seller and the Buyer. - Is your facility, leased or owned, clean from an environmental point of view? Does the
facility meet cleanliness and safety standards? How is the lighting? - Do you control your sales force, or do you use agents? How are they paid?
- How do your financial and production metrics compare with industry standards?
- Do you have warranties for your products? Are there financial reserves for warranty
liability? - Can the business operate without you micromanaging every detail?
All these items, one by one, can be overcome. However, each one can have an impact on
Business Value. If you have a business valuation guy showing you a value for the business way
more than what you would pay, there may be a problem.
If you are thinking of selling your business, give me a call and I will help you get ready to sell
your business. I don’t charge for this service; it is part of establishing a relationship.
Take Care and be Safe!
Dale Shepherd, Capital Business Solutions
Vice President Managing Director TN, NC, VA
Master Certified Business Intermediary and Certified Franchise Broker
Kingsport, TN