Buying A Manufacturing Company – A Look at the Process

Buying Process
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Buying A Manufacturing Company – A Look at the Process

If you are reading this, you are already contemplating the purchase of a manufacturing company. It’s guaranteed to be one of the most exciting, exhilarating and emotionally challenging events in your lifetime. And if this is your first rodeo, there are likely to be a few things that keep you up at night. Namely, “What is the seller’s motivation for selling”? “Is this business as profitable as you say it is?” “Am I going to pay too much for this business?”

Involving a business broker who specializes in the sale of manufacturing companies is always a smart thing to do. While representing the seller, it is still the broker’s job to walk the buyer through the process, help manage the emotional roller coaster, ethically & honestly answer questions, and help identify professional advisors (mergers and acquisition attorneys, tax accountants, etc.) to ensure a smooth process. And, since some brokers are not compensated until the sale is complete, it is in their best interest to achieve a win-win for both parties.

Generally, the process looks like this:

Initial Steps

  • Potential buyer contacts broker to learn more about a specific company
  • Broker requests the completion of an NDA (a non-disclosure agreement)
  • Broker provides “offering memorandum” or business summary of company
  • Broker qualifies you financially

Next Steps

  • Interest piqued? Potential buyer requests and receives redacted financial
    information in the form of financial statements and tax returns
  • Still interested? A plant visit is scheduled
  • More Q&A
  • Perhaps a second plant visit

Coming Down the Home Stretch

  • Letter of Intent (LOI) submitted to broker
  • Negotiation takes place
  • LOI is accepted
  • Due diligence occurs
  • Closing scheduled

The whole process takes approximately 3 – 6 months.

The business broker will be your ally. These individuals and firms have the expertise, contacts and skill set to help navigate this journey. Click here to complete our Buyer’s Form. We’re happy to help you get started AND sleep at night.

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