Likely Buyers
- Larger shop or contract manufacturerWants more machines, more floor space and customers it does not serve today.
- Private equity backed platformLooks for steady earnings it can combine with other shops under one roof.
- Experienced plant manager with SBA backingKnows the work and needs a shop that runs without the owner on the floor.
What the buyer is paying for
Buyers price a shop on the cash left after one working owner is paid, then apply a multiple. Most Main Street companies change hands at about two to three times that cash flow.
Shops with a plant manager in place and larger profits are often priced on EBITDA instead, with a market rate manager deducted first.
Where the risk sits
Machines wear out, and buyers know it. Many will accept only part of your depreciation as an add back, because someone has to fund spindle rebuilds, tooling and eventually new equipment.
Certifications are the next question. Quality systems and customer approvals take years to earn, and a buyer wants to know they stay in force after the sale.
A big share of sales from one prime contractor worries buyers. If your top one to three accounts pass about fifteen to twenty percent of revenue, expect a discount near that share or a buyer who walks.
Backlog and repeat work
Buyers like written purchase orders, long term agreements and repeat part numbers. Work that comes by handshake is harder to believe, and a backlog helps only if it has paper behind it.
People and plant
Programmers, setup people and inspectors are hard to replace. A buyer wants to know who runs each shift and whether anyone plans to leave when you do.
If you own the building, the real estate may deserve its own value and its own plan, apart from the shop.
Before you list
- Three years of statements that tie to your tax returns
- A machine list with age, make, hours and condition
- Sales by customer for each year
- Your certifications and the date each one renews
Read how an asset sale splits the price, then how buyers finance a purchase. When you want a number, see what your company is worth.