How to Avoid Disappointment When It’s Time to Cash Out

One of the biggest concerns for business owners looking to sell is whether they’ll walk away satisfied with the deal. Valuing your business isn’t just about spreadsheets and market trends—it’s about what your company is truly worth to you. Let’s face it: hearing about what someone else got for their business doesn’t always align with your situation. And relying solely on industry benchmarks can be a path to disappointment. 

How Do Current Trends in Manufacturing Impact Valuations?

A lot of business owners shape their expectations based on what they’ve heard happening in the market. For example, if you hear a competitor had 30 interested buyers and got top dollar, it’s easy to think your business will have the same results. But what’s happening in the market today may be very different from what was going on when they sold.  

Market conditions fluctuate, and manufacturing is no exception. If you’re selling when demand is high, and the industry is on the rise, you’ll likely see better terms and more interest. But if the market is cooling or entering a downturn, valuations can dip, and deals often get more complex with financing. 

We’ve seen it in manufacturing where key factors like your backlog and what the next 6–12 months look like for your sector play a huge role in how buyers assess value. If the industry’s strong, you’ll see more buyers at the table and better offers. But aligning expectations with the reality of current market conditions is crucial to avoiding disappointment. 

A $9 Million Success Story

Let’s look at a real example to illustrate how market research and a strategic approach can lead to exceeding expectations. 

We worked with a manufacturing client whose initial valuation came in at about $5 million. However, the owners were hoping to get closer to $6 million. Through our market research, we found that this company had some unique aspects—they were positioned more on the engineering services side and outsourced much of their manufacturing. We realized that for the right buyer, this company could be much more valuable, especially for a business that had excess manufacturing capacity and could benefit from owning the engineering side. 

We reached out to specific buyers who would recognize that value and discovered several that were highly interested. This wasn’t just about finding any buyer—it was about finding the one that truly valued what this business had to offer. After some competitive interest and negotiations, the deal closed at $9 million—all cash. 

That kind of result doesn’t happen by chance. It requires understanding the unique strengths of the business, identifying the right buyers, and creating the right competitive environment to drive up the value. What started as a $5 million valuation ended as a $9 million success because we were able to find a buyer who saw the true potential in the business. 

The Importance of Defining Your Valuation

This success story highlights why it’s so important for owners to define their own valuation rather than relying solely on industry norms. While industry benchmarks can be helpful, they don’t tell the whole story. 

Many business owners make the mistake of assuming their company is worth what it was in the past. It’s not uncommon for owners to say, “I had a valuation done five years ago, and my sales haven’t changed much, so my company must still be worth the same.” Unfortunately, this thinking overlooks how market dynamics have changed.

Owners need to factor in what makes their business unique and how that might resonate with the right buyer. For example, if your business has proprietary processes, long-standing customer relationships, or specialized knowledge, these could be aspects that set your company apart from others in the market. 

Just like in real estate, where a house’s value can fluctuate dramatically based on market trends, the same principle applies to your business. Your company’s current value depends on a range of factors, including recent financial performance and broader market trends. An outdated valuation doesn’t reflect today’s realities. 

Balancing Personal and Investor Expectations

For business owners with external investors, there’s often a balancing act between personal valuation goals and investor return expectations. Each party may have different ideas about when to sell and what price to aim for. Aligning these goals early is critical to avoiding conflict during the sale process. 

At NuVescor, we work to ensure that all stakeholders are on the same page about the value of the business before going to market. This includes laying out the risks of waiting too long to sell and understanding how market conditions might affect future valuations. Ensuring alignment helps avoid surprises and potential contention that could derail a deal. 

Customizing the Approach for Each Owner

Ultimately, selling a business is about more than just the numbers. Every owner has unique goals, whether it’s preserving the company’s legacy, protecting employees, or maximizing financial return. We customize our approach to make sure these factors are considered when finding the right buyer. 

In the $9 million deal, the owners were initially concerned that strategic buyers would disrupt their company’s culture. But by finding the right fit, we were able to bring in a buyer that not only met their financial goals but also aligned with their vision for the company’s future. That’s the kind of outcome every business owner should strive for. 

In the end, defining your valuation, understanding current market trends, and aligning with the right buyer are the keys to avoiding disappointment when it’s time to cash out. 

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Don’t Let One Bad Year Derail Your Business Exit

As we look ahead to 2025, the economy is stabilizing after the turbulent COVID years, and many business owners are seeing signs that it may be an ideal time to consider selling their business. However, some owners are hesitant—particularly if they’ve experienced a recent off-year. The concern is understandable: How can one bad year affect the value of your business, and will it derail your chance at a successful exit? 

At NuVescor, we work with business owners facing this exact situation. The good news? A single down year doesn’t have to define your exit. The key is to start preparing now, leveraging your stronger financial history and aligning your strategy with broader economic indicators.  

Here’s how to ensure that one challenging year doesn’t stand in the way of maximizing your business’s value. 

Key Indicators of Readiness: It’s Not Just About the Past Year

One common misconception among business owners is that a single down year automatically reduces their company’s value. According to Randy Rua, President at NuVescor, buyers care more about what’s happening now and what’s projected in the next 12 months. 

“Buyers are less focused on a one-time drop in performance and more interested in what you’ve done since then,” says Rua. “If your business is back on track with a solid pipeline, that’s what drives interest and offers.” 

The key is demonstrating recovery.  

If your previous years’ numbers are down, but you can show strong financials over the past 12 months and a healthy outlook for the next six to twelve months, you’re still in a good position to sell. What’s important is explaining the reasons behind any downturn and clearly outlining what has been done to correct the course. 

Leveraging a Strong Earnings History

Even with a recent dip, a long-term history of strong earnings can still be a major selling point for prospective buyers. Demonstrating consistency in prior years helps to balance out one weaker year, especially if the financial downturn was due to external factors like market disruptions or economic shifts rather than fundamental business issues. 

“Your strong earnings history is a big asset,” says Rua. “A buyer will want to see that the company has a track record of success, and that you’ve recovered or are recovering from a weaker period.” 

To capitalize on this, be prepared to show detailed financials from past years, along with a clear explanation of how and why your business is back on track. Highlight any proactive steps you’ve taken, such as cost-cutting measures, new customer acquisitions, or operational efficiencies that have been put in place to drive recovery. 

What Economic Trends Should You Monitor?

As 2025 approaches, it’s important to keep an eye on broader economic trends that can influence the timing of your sale. Lower interest rates, for example, can drive buyer demand, as borrowing costs decrease and investors look for opportunities to make acquisitions. 

“We’re hearing a lot of talk about interest rate cuts coming in the near future,” notes Rua. “If rates drop, it could create a flurry of buyer activity, but some may wait for further cuts before pulling the trigger. Timing your sale with these changes could potentially work to your advantage.” 

In addition, if you’re in the manufacturing sector, keeping an eye on industry-specific indicators such as the PMI (Purchasing Managers’ Index) is key. A declining index can spook buyers, while a stable or rising one can bolster confidence in future growth prospects. Stay informed and be ready to move when the timing is right for your industry. 

Positioning After a Tough Year: Strategies for Success

Even after a weaker financial year, it’s entirely possible to position your business as an attractive acquisition target. The key lies in transparency and creating a compelling narrative that explains the dip while focusing on your company’s recovery and future potential. Rua points out two common scenarios that can be effectively reframed: 

1. Lost Customers: If your business lost a major client but gained several smaller ones in return, you’ve diversified your customer base. This reduces risk for buyers and signals stronger long-term stability. 

1. Bad Investments: If a failed product launch or a costly new hire led to higher expenses without corresponding revenue growth, be upfront about what went wrong. Acknowledge the lesson learned and show that it won’t be repeated. 

The Risks of Waiting Too Long to Sell

A common pitfall business owners face is waiting too long after a strong financial year, hoping for even better results in the future. The danger here is that market conditions can shift quickly. If you miss the window of opportunity, you may find yourself waiting through another cycle of poor economic conditions before your business is attractive again. 

“The biggest risk of waiting is that the economic indicators could turn against you,” Rua explains. “If interest rates rise again or your sector faces a downturn, you might end up holding onto the business longer than planned, which can ultimately reduce your valuation.” 

Preparing Your Financials for 2025

If you’re considering a sale in 2025, now is the time to start preparing. Buyers today are looking closely at financials—not just the numbers, but the story behind them. Making sure your financials are easy to understand and reflect the full picture of your business’s performance is essential. 

Rua emphasizes, “Buyers want to see the whole story. Make sure your financials are clean, tell a compelling narrative, and highlight the strategic decisions that have put your business back on track after a tough year.” 

Take Action Now

As we move toward 2025, business owners who are thinking of selling should be actively working on their exit strategy. This means bringing in advisors early, ensuring your financials are in order, and positioning your business to appeal to the right buyers. 

At NuVescor, we help business owners look at their financials from a buyer’s perspective and identify areas where they can maximize value. Starting now gives you the flexibility to adapt to market conditions and ensure you’re ready to go when the time is right. 

Don’t let one bad year derail your business exit. With the right preparation and timing, you can achieve a successful sale in 2025—and potentially secure a premium offer. 

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A Blood Pressure Test for Your Manufacturing Business

When was the last time you had your blood pressure tested?

Measuring blood pressure is often one of the first steps a doctor takes before addressing any health concerns. This simple test provides a reliable snapshot of your overall health and can serve as an early warning sign for issues ranging from heart disease to poor circulation.

While it doesn’t give the doctor a complete picture, this straightforward measurement offers valuable insights into your general well-being.

Now, think about your manufacturing business. When was the last time you gave it a thorough check-up? In the manufacturing industry, it’s easy to get caught up in daily operations and overlook underlying issues that could affect your company’s long-term health and value.

Just as a doctor checks your blood pressure to gauge your physical condition, there’s a way to assess the health of your business: the Value Builder Score

Understanding the Value Builder Score

What is the Value Builder Score?

Think of the Value Builder Score as a comprehensive blood pressure test for your business. Just as one powerful ratio—the blood pressure reading—gives doctors insight into your overall health, your Value Builder Score amalgamates key aspects of your business to provide a clear picture of its well-being. It’s an evaluation tool that looks at eight key areas influencing your company’s value:

1. Financial Performance: Are your revenues and profits trending upward?
2. Growth Potential: How much room is there to expand your business?
3. Switzerland Structure: Is your business independent of any one employee, customer, or supplier?
4. Valuation Teeter-Totter: How well do you manage cash flow?
5. Recurring Revenue: Do you have stable, predictable income streams?
6. Monopoly Control: What sets you apart from competitors?
7. Customer Satisfaction: Are your customers loyal and likely to refer you?
8. Hub & Spoke: Can your business thrive without you being there every day?

By analyzing these areas, the Value Builder Score provides a clear picture of your company’s strengths and weaknesses. It’s not just about the numbers—it’s about understanding the entire ecosystem of your business.

Take the Value Builder assessment 

Why This Matters for Manufacturing Owners

In manufacturing, challenges like supply chain disruptions, technological advancements, and skilled labor shortages are all too common. Hidden problems can lurk beneath the surface, much like high blood pressure in an otherwise healthy person.

For example:

• Supply Chain Vulnerabilities: Are you too reliant on a single supplier?
• Technological Lag: Is outdated equipment slowing you down?
• Customer Concentration: Do a few clients make up most of your revenue?

Identifying and addressing these issues can significantly increase your company’s value, especially if you’re considering selling.

Predicting Good Outcomes Too

When a doctor measures your blood pressure, they’re not just checking for immediate health issues; they’re also using that information to predict your future well-being. Similarly, your Value Builder Score can serve as a forecast for your business’s potential.

Consider this: Based on data from over 10,000 business owners who have completed the Value Builder Score questionnaire, the average offer they receive for their business is 3.7 times their pre-tax profit. However, those who achieve a Value Builder Score of 80 or higher receive offers averaging 6.6 times their pre-tax profit.

To illustrate:

• An average-performing business generating $500,000 in pre-tax profit might be valued at around $1,850,000 ($500,000 x 3.7).
• If the same business improves its Value Builder Score to 80+ while maintaining the same profitability, it could be valued closer to $3,300,000 ($500,000 x 6.6).

While there’s no guarantee that boosting your Value Builder Score to 80 will result in an offer exactly 6.6 times your pre-tax profit, this single metric provides valuable insight into your business’s overall performance. With this information, you and your advisor can develop a strategic plan to enhance your company’s health—and its value—in the future.

Don’t Let Hidden Issues Erode Your Business Value

High blood pressure is known as the “silent killer” because it often shows no symptoms until significant damage has occurred. Similarly, unnoticed problems within your business can quietly undermine its value.

By proactively assessing your company’s health, you can:

• Uncover Hidden Risks: Identify areas that could deter potential buyers.
• Enhance Strengths: Build on what makes your business unique.
• Increase Market Appeal: Position your company as a valuable opportunity.

How NuVescor Can Help

At NuVescor, we specialize in helping manufacturing business owners like you understand and improve their company’s value. Our team brings deep industry knowledge and a personalized approach to guide you every step of the way.

Our Process:

1. Comprehensive Assessment: We’ll work with you to complete your Value Builder Score.
2. Strategic Planning: Identify key areas for improvement and develop an action plan.
3. Implementation Support: Assist you in making changes that enhance value.
4. Preparation for Sale: When you’re ready, we’ll help you navigate the selling process to achieve the best possible outcome.

Your manufacturing business is more than just numbers on a balance sheet—it’s the result of years of hard work, dedication, and passion. Ensuring its health isn’t just about preparing for a potential sale; it’s about building a stronger, more resilient company for the future.

Don’t wait until hidden issues become major problems. Take control of your business’s health today.

Remember, the best time to check your business’s health is before it shows signs of trouble. Let’s work together to ensure your manufacturing company thrives now and in the years to come.

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