What are the Different Types of Buyers in Manufacturing?

When it comes to selling a business, understanding the types of buyers in the market is crucial. Each buyer type—strategic buyers, private equity (PE) firms, or financial buyers—has different motivations and strategies that affect the sale process. This page will help you navigate these differences, offering insights into how NuVescor’s expertise can assist you in choosing the right buyer for your company. 

Characteristics of Strategic Buyers in Manufacturing

Strategic buyers are typically companies within the same industry as the seller, seeking to expand their operations, enhance their product lines, or gain a competitive edge. In the manufacturing sector, strategic buyers target businesses that complement their existing operations.

This can include strategic acquisitions of companies to enter new geographic markets, add new products or services, increase market share, or acquire specialized talent. The goal is to create synergies in business sales—ensuring the combined value of the two companies exceeds their individual worth—leading to a stronger, more competitive business. 

Strategic buyers are often willing to pay a premium for the right acquisition, recognizing that the long-term benefits, such as improved efficiencies, expanded capabilities, and enhanced market positioning, outweigh the initial investment.

The strategic fit between the buyer and seller is crucial, as it ensures that the acquisition aligns with the buyer’s broader business objectives and future growth plans. 

 

Advantages and Disadvantages of Selling to Strategic Buyers

Selling to a strategic buyer can unlock significant advantages, but weighing these benefits against the challenges that may arise during the transaction process is important. 

Advantages of Selling to a Strategic Buyer:

• Potential for Higher Business Valuation: Strategic buyers often see greater value in businesses that align with their long-term goals. This can lead to a higher purchase price than other types of buyers, as they may be willing to pay a premium to acquire capabilities, market share, or geographic presence that complements their existing operations.
   

• Opportunities for Growth: Selling to a strategic buyer can open up new avenues for growth. This may include access to new markets, expanded distribution channels, and additional resources to accelerate your company’s development.
   

• Synergy Benefits: Strategic acquisitions are typically ones where the combined entity can achieve greater efficiencies, cost reductions, or better competitive positioning.  

 

Disadvantages of Selling to a Strategic Buyer:

• Longer Transaction Process: Strategic buyers, especially larger ones, often have multiple layers of decision-making involving internal and external legal teams, financial advisors, and various committees. This can slow down the transaction process, sometimes extending it over several months. The complexity of these deals often requires persistent effort from intermediaries to push the process forward.
   

• Potential Culture Clashes: Merging your company with a larger organization can expose differences in business cultures that can affect employee morale and disrupt day-to-day operations. 

Selling to a strategic buyer offers the potential for higher returns but often requires patience and careful management to navigate the complexities of the process. 

 

Examples of Strategic Buyers in Action

In an interview with NuVescor’s Seth Getz, advisor Nick Good shares a story illustrating how a sale to a strategic buyer can lead to transformative growth. The acquisition target company was an automation business in Fort Wayne, Indiana, specializing in fabricating automated production equipment for the automotive industry.

The strategic buyer, who owned a laser fabrication business and a machining business across different industries, was attracted to the Fort Wayne company’s customer base and automation expertise.

Post-acquisition, the buyer and the president of the acquired business collaborated to explore new market opportunities.

Together, they identified a promising venture: developing robotic welding capabilities for pontoon boats, a novel application for the company’s automation technology. This collaboration allowed the acquired company to expand into a new market and grow in a way it couldn’t have achieved on its own. 

For other examples, take a look at some recently completed deals: 

• Verona Industrial Controls: NuVescor Advises Control Dynamics In Acquisition By Verona Industrial Controls
   
• Coesia: How an Automation Company Strengthened US Presence with Strategic Acquisition of Niche Material Handling Manufacturer  

Characteristics of Private Equity Buyers in Manufacturing

Private equity (PE) firms are drawn to manufacturing businesses because of their stable cash flow and opportunity for business growth through acquisition and operational improvements.

PE buyers are investment groups that specialize in acquiring businesses to enhance their operations and financial performance, ultimately aiming to sell them at a profit. In the manufacturing sector, PE firms often target companies with strong growth potential or opportunities for operational improvements. 

PE firms acquire businesses to improve their operations and financial performance to sell them for a profit within a typical ten-year timeframe. They are funded by limited partners. The PE firm acts as the general partner, strategically investing in platform companies—initial acquisitions in specific industries—and growing them through organic growth and add-on acquisitions.

PE firms aim to increase the value of these businesses using EBITDA arbitrage, where larger companies are sold for higher multiples due to reduced risk.

Ultimately, PE firms seek to maximize returns by selectively paying premiums for platform companies and acquiring additional businesses at lower costs. Their key characteristics include: 

• Investment Structure: Private equity firms are funded by limited partners (LPs), such as pension funds, endowments, and high-net-worth individuals, who entrust the firm (the general partner) to invest their capital and generate returns within a specified timeframe, typically around ten years.
   

• Following a Platform and Add-On Strategy: PE firms frequently seek what they call a “platform company”—their initial acquisition in a particular industry. Once a platform company is established, the firm may pursue business growth through additional acquisitions, known as “add-ons” or “roll-ups,” to expand the platform. These add-ons help grow the company organically and through strategic acquisition, increasing overall value. 

 

• Use of EBITDA Arbitrage: One of the main strategies PE firms use to increase the value of their investments is EBITDA arbitrage. By promoting business growth through acquisitions and operational improvements, they enhance its profitability (EBITDA) and, consequently, its market value. Larger companies generally command higher valuation multiples because they are perceived as lower risk, making them more attractive to future buyers. 

 

• Focus on Financial Returns: PE buyers primarily focus on achieving a financial return. They aim to grow the acquired business rapidly and efficiently, often with an eye toward exiting within five to seven years. 

 

• Transaction Speed: While professional and experienced in executing private equity transactions, PE firms can be extremely thorough in their due diligence processes. This can lead to a rigorous and time-consuming review of a company’s financials, operations, and growth potential before finalizing a deal. 

 

Private equity transactions play a significant role in the mergers and acquisitions (M&A) landscape, offering a structured and financially driven approach to acquiring and growing manufacturing companies. Their focus on value creation through strategic acquisitions and operational improvements makes them a compelling option for sellers looking to grow their business before eventually exiting. 

Contact Us to discuss whether a PE buyer is right for your firm. 

 

Differences Between Strategic Buyers and PE Firms

The key differences between PE buyers and strategic buyers in manufacturing company M&A are: 

• Purpose of Acquisition: 

• • PE Buyers acquire businesses with the goal of improving operations and financial performance and selling them for a profit within a defined timeframe, usually around 10 years.

• • Strategic Buyers seek to acquire companies that complement their existing operations, aiming to create synergies and enhance long-term business value rather than focusing on an eventual sale. 

• Transaction Speed: 

• • PE Buyers typically move faster in the acquisition process due to their experience in deal making and focus on growth and returns, making decisions quickly to close deals efficiently.

• • Strategic Buyers often move more slowly as deals often involve multiple layers of internal and external approvals

• Focus on Growth: 

• • PE Buyers concentrate on rapid growth, both organically and through add-on acquisitions, to increase the business’s value before selling it.

• • Strategic Buyers focus on long-term growth and integration, seeking to strengthen their overall business through the acquisition, with less emphasis on an exit strategy. 

• Valuation and Pricing: 

• • PE Buyers may offer competitive business valuations but tend to avoid paying a premium unless the business serves as a critical platform company with significant add-on potential

• • Strategic Buyers are often willing to pay a premium for businesses that align closely with their strategic goals, recognizing the added value through synergies. 

• Integration and Cultural Fit: 

• • PE Buyers focus on optimizing operations and may make significant changes to improve performance

• • Strategic Buyers place a greater emphasis on aligning cultures and planning for integration

• Long-Term Vision: 

• • Private Equity Buyers have a defined exit strategy, typically aiming to sell the acquired business after growing it over a few years

• • Strategic Buyers generally do not have an exit in mind. Instead, they focus on how the acquisition will benefit their company in the long run, often with no immediate plans to sell. 

 

The Role of Platform and Add-on Acquisitions for Private Equity Buyers

PE firms frequently employ a strategy that begins with acquiring a platform company—a well-established, strong business within a specific industry. This platform serves as the foundation upon which the PE firm builds additional value by making add-on acquisitions—smaller companies that complement or enhance the platform’s capabilities.

These add-ons could bring specialized expertise, new technologies, or access to new markets, all of which help to expand the platform’s operations and improve its overall performance. 

How the Platform and Add-On Model Works

When a PE firm identifies a suitable platform company, it often pays a premium to secure this critical initial acquisition. This platform company typically has solid operations, an established market presence, and significant growth potential.

For instance, a PE firm might target a plastics manufacturing company as its platform due to its robust production capabilities and strong customer relationships. 

After establishing the platform, the PE firm looks for add-on acquisitions that can be integrated into the platform to build value. These add-ons might be smaller businesses specializing in specific plastic parts or processes, enhancing the platform’s product offerings and market reach.

By carefully selecting and integrating these add-ons, the PE firm can grow the platform company organically through increased sales and market reach and strategically by filling gaps in capabilities or expanding into new areas. 

The Benefits & Challenges of the Platform and Add-On Strategy

The platform and add-on strategy offers several benefits: 

• EBITDA Arbitrage: One of the key advantages of this strategy is the concept of EBITDA arbitrage. By acquiring smaller companies at lower multiples and integrating them into the larger platform, the PE firm can increase its overall EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This makes the platform more valuable and enables the firm to sell it at a higher multiple in the future.
   

• Reduced Risk: As the platform grows through add-on acquisitions, its size and scale help reduce operational risks. Larger companies with diversified customer bases and broader capabilities are generally less vulnerable to losing key customers or market shifts, which further enhances their value.
   

• Specialized Growth: Each add-on acquisition allows the PE firm to target specific growth areas within the industry. Whether through geographic expansion, product diversification, or technological advancement, these acquisitions enable the platform to leverage the strengths of each new addition. 

 

Challenges of the Platform and Add-On Model

While the platform and add-on strategy can be highly effective, it is not without challenges: 

• Finding the Right Fit: With thousands of PE firms in the market, selecting the right platform company and identifying suitable add-on targets can be complex and time-consuming. Each potential acquisition must align with the overall strategy and offer genuine value to the platform.
   

• Integration Complexity: Successfully integrating add-on acquisitions into the platform company requires careful planning and execution. Cultural differences, operational mismatches, and integration costs can affect the growth trajectory. 

 

Advantages and Disadvantages of Selling to PE Firms

Selling your business to a PE firm can be a pivotal move, offering significant advantages, but it’s not for every business. Here’s what you need to know to make an informed decision. 

Advantages of Selling to a Private Equity Firm

• Access to Capital: One of the biggest benefits of selling to a PE firm is the substantial capital injection they can provide. This capital can be directed towards expansive growth initiatives, such as entering new markets, developing innovative products, or scaling operations. With a PE firm’s financial backing, your business can achieve growth that might otherwise be out of reach.
   

• Strategic Guidance and Operational Expertise: PE firms bring more than just financial resources; they also offer strategic insights and operational expertise. By partnering with seasoned professionals who specialize in scaling businesses, you can refine your company’s strategies, optimize performance, and explore new avenues for expansion.
   

• Operational Efficiencies: PE firms often focus on improving operational efficiency by implementing cost-cutting measures and leveraging economies of scale. These efforts can boost revenue and profit margins, making your business more competitive and profitable in the long term.
   

• Accelerated Growth: With capital, strategic guidance, and operational improvements, businesses backed by PE firms can experience rapid and sustainable growth. This accelerated growth can propel your company to new heights and help you achieve your full potential more quickly.
   

• Higher Valuation for Future Sale: A key goal of PE firms is to increase the value of the businesses they acquire. By driving growth and enhancing profitability, a PE firm can position your company for a future sale at a higher valuation, potentially resulting in a significant return for you as the original owner.
   

• Faster and More Predictable Transactions: PE firms often have streamlined processes and can complete acquisitions faster than strategic buyers. As experienced buyers with clear criteria, PE firms can make the sale process more predictable. 

 

Disadvantages of Selling to a Private Equity Firm

• Loss of Control: Selling to a PE firm often means relinquishing some control over your company. PE firms usually take an active role in management, which can lead to significant changes in how the business is run. For some owners, this loss of autonomy is a major drawback

• Pressure for Returns: PE firms focus on generating returns for their investors, which can create pressure for rapid growth and profitability. This focus on short-term financial performance may conflict with your long-term vision for the business

• Short-Term Focus: The typical investment horizon for a PE firm is around 5-7 years. While this can lead to quick gains, it may not align with your long-term goals for the company. If you’re seeking a partner with longer-term ambitions, a PE firm may not be the best fit

• Lower Initial Valuations: PE firms may offer lower initial valuations, focusing on potential future returns rather than synergies. Selective Premiums: PE firms typically avoid paying a premium unless the acquisition is a critical platform company or a strategically significant add-on that aligns with their growth strategy. They tend to be more conservative with business valuations, seeking opportunities to maximize returns through operational improvements and strategic growth

• Choosing the Right PE Firm Can Be Challenging: With thousands of PE firms in the market, finding the right one can be challenging. Most PE firms will value your business in a similar range, making it difficult to differentiate between them based on financial terms alone.  

 

Identifying why you want private equity involvement and what you hope to achieve is crucial. If your goal is purely financial, finding a buyer is relatively straightforward.

However, if you’re looking for a partner with a strategic vision, perhaps one that has already made several acquisitions in your industry, it’s essential to find a PE firm that aligns with your business goals. The right PE firm can offer more than just capital—they can bring strategic value and excitement as you become part of a larger growth story.

Contact Us for insight and guidance on choosing the right PE buyer for your firm.

Characteristics of Financial Buyers in Manufacturing

Financial buyers are entities primarily focused on acquiring businesses as investments rather than for strategic integration.  

Financial buyers include individual investors, small investment groups, and family offices.

Unlike strategic buyers, who seek to integrate a target company into their existing operations, financial buyers view acquisition as a way to generate financial returns, often through growth, improved efficiencies, and, eventually, resale. Key characteristics include: 

• Focus on Financial Performance: Financial buyers emphasize cash flow, profitability, and growth potential, as these metrics directly influence the financial return on investment. A stable and predictable cash flow is critical, especially if the buyers plan to use debt financing for the acquisition.

• Investment-Oriented Approach: Unlike strategic buyers who may seek operational synergies or market expansion, financial buyers are looking to maximize their financial return on investment. This might involve holding the business for a period, improving its performance, and selling it at a higher valuation. They are less interested in integrating the company into existing operations and more focused on its standalone financial prospects.

• Use of Debt Financing: Financial buyers, particularly individual investors, often rely heavily on debt to finance acquisitions. Because of this, they require the target company to have predictable and stable cash flows to service the debt. This reliance on debt means that the company’s financial performance is vital.

• Objective Valuation: Financial buyers typically approach a business valuation more objectively, focusing on tangible financial metrics rather than emotional or operational considerations. They assess the company based on its ability to generate returns, often using multiples of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) as a benchmark.

• Potential for Operational Improvements: While financial buyers focus on financial returns, they also look for opportunities to enhance the value of the acquired company. This may include improving operational efficiencies, cost management, or business expansion through strategic initiatives. However, their main goal remains the financial uplift rather than the operational integration with other businesses.

• Exit Strategy: Financial buyers generally have a clear exit strategy from the outset. They aim to increase the company’s value and sell it within a specific timeframe, typically within 5-7 years. The emphasis is on achieving a higher multiple upon exit, often by growing the business or improving its profitability during the holding period.

• The Emotional Component: For individual buyers, acquiring a company often has a personal dimension. They see themselves stepping into the role of the business owner or CEO, which can drive a more emotionally charged acquisition process. While still concerned with financial performance, individual buyers may also consider their personal connection to the business and the legacy they wish to build. 

 

Comparing Financial Buyers with Strategic Buyers and PE Firms

When it comes to acquiring manufacturing businesses, PE firms, strategic buyers, and financial buyers have distinct approaches and priorities. Understanding these differences can help business owners and sellers determine which type of buyer aligns best with their goals and circumstances. 

The difference between the types of buyers can be summarized as follows:  

• Strategic Buyers focus on synergies and integration, offering long-term commitment and industry expertise, but may pose integration challenges.

• PE Firms offer growth potential and financial backing but often have a short-term focus.

• Financial Buyers prioritize financial stability and may offer quicker transactions but are debt-dependent, providing less growth support.  

Choosing the right buyer depends on your goals as a seller, whether you’re looking for long-term stability, growth opportunities, or a straightforward financial transaction. 

Advantages and Disadvantages of Selling to Financial Buyers

Financial buyers often offer quicker and simpler transactions with fewer conditions, but they may also offer lower valuations and have less capital or experience for post-acquisition growth.

As a result, while the sale process is streamlined, the financial buyer might not provide the same level of investment or strategic incentives as other types of buyers. 

Advantages of Selling to a Financial Buyer:  

• Simpler Processes: The sale process is often less complex, with fewer requirements for integration or strategic alignment. 
• Quicker Transactions: Financial buyers often seek straightforward deals with fewer conditions, leading to faster transactions.

 

Disadvantages of Selling to a Financial Buyer:

• Limited Resources: Financial buyers may have less capital or experience growing the business post-acquisition. 
• Limited Premium Valuations: Financial buyers may not be willing to pay as much as strategic or PE buyers, as they lack the same strategic incentives.

Understanding Buyer Valuations in Manufacturing

 

Factors Influencing Valuation by Strategic Buyers 

Strategic buyers consider how well the target company fits with their existing operations. Synergies, such as cost savings or new market opportunities, can significantly impact the valuation. 

Factors influencing valuation by strategic buyers include: 

• Geographic Expansion: Strategic buyers often look for opportunities to expand their geographic footprint. Acquiring a company in a new region can provide access to new markets and customers. 

• Product or Service Expansion: Adding new products or services to their existing portfolio can help the buyer diversify their offerings and reduce dependency on a single product or service. 

• Market Share: Increasing market share is a significant motivator. By acquiring a competitor or a company in a related industry, strategic buyers can consolidate their position in the market. 

• Operational Synergies: Strategic buyers look for companies that can provide operational synergies in business sales. This includes cost savings through economies of scale, improved efficiencies, and better utilization of resources. Strategic buyers may also look for companies that can enhance their supply chain capabilities. 

• Financial Performance: The financial performance of the target company, including its revenue, profit margins, and cash flow, is a critical factor in determining its valuation.

• Management Team: A strong management team can help ensure smooth integration and successful execution of the strategic plan. Strategic buyers often look for companies with skilled employees who can contribute to the growth and success of the combined entity. 

• Customer Relationships: Robust customer relationships and a loyal customer base are attractive to strategic buyers. These relationships can provide a stable revenue stream and opportunities for cross-selling and upselling. 

• Technology and Innovation: Acquiring companies with advanced technology or innovative products can provide a competitive edge. Strategic buyers often look for companies that can enhance their technological capabilities. 

• Industry Trends: Current trends and conditions in the industry can impact the valuation of the target company. This includes regulatory changes, technological advancements, and economic conditions. 

 

Valuation Approaches of Private Equity Firms 

PE firms focus on financial returns, evaluating growth potential, operational efficiencies, and the potential for add-on acquisitions to enhance value. 

Factors influencing business valuations by PE firms include: 

• Financial Performance: Predictable and sustainable cash flow is especially important as it allows PE firms to meet debt obligations, fund future investments, and generate investor returns. 

• Capital Expenditure Requirements: The capital expenditure required to support future growth and cash flow is also a factor. Industries with lower capital expenditure requirements may be more attractive. 

• Potential for EBITDA Arbitrage: PE firms seek businesses with the potential to improve their profitability (EBITDA) through operational enhancements and strategic initiatives before selling them at a premium. 

• Operational Efficiency: A well-run business with a capable leadership team is essential for driving profitability, reducing costs, and improving overall business performance. 

• Market Position: Understanding a company’s position within its industry, its competitive advantages, and the broader industry trends helps PE firms assess its growth potential, risk profile, and potential for value creation. 

• Industry Trends: Current trends and conditions in the industry can impact the valuation of the target company. This includes regulatory changes, technological advancements, and economic conditions. 

• Exit Strategy: PE firms typically have a defined exit strategy, such as an IPO or sale to a strategic buyer, and the business’s long-term goals must align with this plan to ensure a successful partnership. 

 

How Financial Buyers Determine Valuation 

Financial buyers, such as individual investors or small investment groups, typically base their valuations on the business’s current financial health and tangible assets, focusing on the business’s current profitability and cash flow stability.

The factors include: 

• Financial Performance: This includes historical and projected revenue, profit margins, and cash flow. Buyers look for stable and growing financials. 

• Assets: The value of assets held by the company after subtracting the cost of liabilities. 

• Quality of Financials: Accurate and transparent financial records are essential. Buyers prefer businesses with well-maintained financial statements. 

• Management Team: A strong, experienced management team can significantly enhance a company’s value. Buyers assess the team’s ability to maintain and grow the business post-acquisition. 

• Capital Expenditure Requirements: Businesses with reasonable capital expenditure needs are more attractive as they imply lower future investment requirements. 

Choosing the Right Buyer for Your Manufacturing Business

Selecting the most suitable buyer for your manufacturing business requires carefully evaluating various factors, including the size of your business, its strategic alignment with potential buyers, and the expected transaction process.  

Assessing Your Business Size

The size of your business and its EBITDA are critical factors that can significantly influence the type of buyer interested in acquiring your company.  

Larger businesses with higher EBITDA often present opportunities for strategic buyers or PE firms because these buyers are typically interested in substantial investments that can drive significant growth or offer valuable synergies with their existing operations.

On the other hand, PE firms are drawn to businesses with strong EBITDA because it indicates a stable cash flow and the potential for leveraged buyouts, where they can enhance value through strategic management and operational improvements. 

Smaller businesses with lower EBITDA might appeal more to financial buyers, including individual investors or smaller investment groups.

These buyers are often interested in acquiring businesses that provide consistent returns without needing significant capital investment or extensive integration efforts. Financial buyers focus on acquiring a business that offers reliable cash flow and steady performance. 

Evaluating the Synergies and Strategic Fit

Understanding how your business aligns with a buyer’s existing operations or portfolio is crucial in attracting the right buyer and maximizing the value of your business. This alignment, often referred to as strategic fit, can significantly impact how attractive your business is to potential buyers, particularly strategic buyers.  

Strategic buyers are typically looking to expand their market presence, enhance their product or service offerings, or achieve operational efficiencies. For these buyers, the value of an acquisition goes beyond just financial performance; they are keenly interested in how the target business can create synergies with their existing operations. 

Synergies can take many forms, such as complementary products or services that expand a buyer’s portfolio, access to new markets or customer segments, or operational efficiencies that can reduce costs or improve productivity.

For instance, if your business has a unique technology or a loyal customer base that a strategic buyer does not currently have, these assets could be highly valuable in enhancing the buyer’s competitive position. The potential to integrate your business seamlessly into its existing operations, thereby achieving immediate and tangible benefits, is a key factor that strategic buyers consider. 

When positioning your business for sale, demonstrating a clear alignment between your business and the buyer’s long-term objectives can make your company more attractive and justify a higher valuation.  

Understanding the Transaction Speed and Process

Different types of buyers approach transactions with varying speeds and complexity levels, which can significantly impact the sale of your manufacturing business.  

Strategic buyers typically require more time to complete a transaction because they also need to include time for integration planning.

They need to assess how the target business will fit within their current operations, how it will contribute to their strategic goals, and what changes or synergies can be realized post-acquisition. This thorough analysis and planning process can lengthen the transaction timeline. 

On the other hand, PE firms and financial buyers often prioritize transaction speed and simplicity. These buyers are typically more focused on the financial metrics of the business, such as profitability and cash flow, rather than how the business will integrate into existing operations.

PE firms and financial buyers can often move through the acquisition process more quickly. They may also employ standardized deal structures that streamline negotiations and reduce the complexity of the transaction. 

Business owners need to consider whether speed or long-term synergistic growth is more attractive when choosing the right buyer.   

Preparing Your Manufacturing Business for Sale

When preparing your manufacturing business for sale, several key areas will significantly impact its attractiveness to potential buyers and the transaction’s success. Preparing your business for sale is essential to maximize its value. This includes gathering financial records, streamlining operations, and addressing any potential issues that could arise during due diligence. 

Preparing for Sale to Maximize Value

Preparation is key to maximizing the value of a business when it comes time to sell, so don’t wait until the last minute to start planning. It is often the case that business owners underestimate the preparation needed for a successful sale. Owners who integrate their long-term goals into daily operations experience a smoother transition and often secure a more attractive valuation. 

Understanding the current market trends and valuation multiples within the industry also matters. “Being well-informed allows you to set realistic expectations and position your business more attractively to potential buyers,” says advisor Nick Good. 

Navigating Due Diligence

Due diligence is critical to the sale process, especially with PE firms. Being well-prepared with detailed financial and operational information can help ensure a smooth transaction. 

Working with Advisors

Mergers and Acquisition advisors, like NuVescor, play a crucial role in facilitating the sale process, helping you identify the right buyer, navigate negotiations, and maximize the value of your business. 

Learn about our Sell-Side Services

Core tasks advisors take on include:  

• Valuation: Understanding fair market value is the crucial first step. An advisor can help you determine a realistic and defensible selling price based on your business’s financials, industry trends, and market conditions. This strong foundation sets the stage for successful negotiations. They can objectively assess your company’s strengths, weaknesses, and overall appeal to potential buyers. At NuVescor, for instance, we have a “blind offering “service that can help business owners gauge potential buyer interest. We create a confidential “blind offering” highlighting your shop’s strengths and share it with our vetted network of potential buyers. Business owners then receive information on the level and type of buyer interest generated without ever revealing the company’s identity. 

• Buyer Selection: An advisor can tap into their network and utilize industry resources to find qualified buyers who are a good fit for your business. Are you looking to maximize the sale price, ensure a smooth transition, or find a buyer who shares your vision for the company’s future? Advisors understand the different types of buyers and can pinpoint the one who aligns best with your goals. 

• Vetting potential buyers: Not all buyers are created equal. Your advisor can assess each buyer’s qualifications, financial strength, and alignment with your goals to ensure you’re negotiating with serious contenders who value your business. 

• Deal structuring: Negotiating a good deal involves more than just the sale price. Your advisor can help structure the deal to align with your objectives and maximize your after-tax sale proceeds. This might involve earn-outs tied to future performance, seller financing options, or non-compete agreements. 

• Financial and legal guidance: The financial and legal aspects of a business sale can be daunting. An advisor can navigate these complexities, ensuring everything is properly documented and protects your interests. 

 

If we believe it’s a good time to sell your manufacturing business, we’ll prepare to take your company to market using a proven process that gets you in front of the right buyers, highlights your company’s unique value, and keeps the deal moving forward quickly (increasing the odds that the deal will close).

We also negotiate competing offers and structure the deal in the most tax-efficient way, taking advantage of a favorable corporate tax environment.  

On the other hand, if we believe it might be prudent to wait to sell your manufacturing business, the NuVescor team will recommend measures you can take to improve the company’s value and set the stage for a stronger deal when the time is right.  

Contact Us for a confidential consultation. 

Helpful Resources

Blogs and Articles 

• Exiting Your Metal Fabrication Business: Buyer and Seller Perspectives for a Successful Transition  

• Why Now Could Be the Perfect Time to Sell Your Manufacturing Business 

• Navigating Your Future as a Metal Former: Exit or Expansion  

• Sell-Side Negotiation Tips from M&A Advisors  

 

On-Demand Webinars 

• Successful Exit Strategies for Fabricated Metal Business Owners  

• Your Five-Step Plan to a Successful Manufacturing Business Exit | NuVescor