The Impact of Technology
Adoption on Valuations

The buzz surrounding new technologies is always intense, leaving entrepreneurs to weigh whether to buy in or wait and see whether the promises of new tech come to fruition. Artificial intelligence and machine learning promise to be the next big trends in manufacturing, even as many companies struggle to integrate far less innovative trends. Manufacturing businesses must weigh the impact of technology adoption on their bottom line, then assess whether various new tech could improve valuations in advance of M&A. 

The Technologies Changing Manufacturing 
Numerous new technologies promise to change manufacturing for the better, accelerating production, reducing liability, and over time reducing overhead. Some of the most promising include: 

  • machine learning and artificial intelligence
  • ultra-fast 3D printing 
  • big data analytics
  • light-based manufacture 
  • virtual reality as a tool for building and testing complex prototypes


Is it Worth the Price? 
Particularly in a pandemic-ravaged world, cost-conscious entrepreneurs may be reluctant to adopt new technology—or at the very least, uncertain which new tech will actually deliver on the promised investment return. 

Technological investments can offer a massive payoff over time, potentially reducing your overhead and steadily improving value. But this hinges on choosing the right technology for your company. The fact that something is popular and incredibly desirable does not mean it will be the right fit for your organization. Consider what you’re already doing, and how new tech might fit into—or expand upon—this. If getting value out of new tech hinges on creating a new product line or operation that you did not otherwise intend to initiate, the investment may not be worth it. 

How Technology Adoption Can Affect Valuation 
Technology adoption improves valuation in three key ways: 

  1. Boosting revenue and reducing risk. New technologies can reduce your overall expenses, and potentially open up new streams of revenue. 
  2. Drumming up buyer interest. When you’re a successful first adopter, buyers may take note. The right technology can also earn you a reputation as an innovator, potentially making your business a more attractive target. Of course, the same innovation strategies that gain you attention also tend to be higher risk. 
  3. It offers valuable technology as an add-on for potential buyers. Buyers who want to gain access to your operations and technological resources may be more likely to invest if you already have high quality tech improvements up, running, and succeeding. 

Getting Expert Input 
Valuation is tricky, especially amid a pandemic. Owners tend to overestimate the value of their company, and expect to get an immediate return on new tech investments. If you’re planning a sale or merger in the coming years and also weighing the potential value of technological improvements, it’s time to bring in a valuation expert. They can identify strengths and weaknesses of your current operation, assess strategies for cultivating value, and help with determining whether the right tech could breathe new life into your business. 


About NuVescor Group
At NuVescor, we align the interests of investors and business owners to enable the personal and financial goals of our clients. For over a decade, we have helped founders and owners of companies in the manufacturing sectors achieve maximum value for their companies. Together, we can provide business valuations, financial analysis, investment guidance, and business transaction advice for middle-market companies with revenues from $5 million to $500 million.

Industry stats show that 75% of business broker transactions fail. By implementing the exclusive Rua Transaction Process we’ve been able to turn that statistic upside down with a success rate of over 80%. Whether you’re considering buying or selling a manufacturing business, put us to work for you and experience the NuVescor difference.