Let's examine the 5 factors of a Great Company for Sale. Buying a business is an enormous venture. There are paramount attributes in a company for sale that a buyer must look toward in order to determine its potential as an acquisition. In this series, we will be exploring the top five things that will make buying a manufacturing business a fortuitous endeavor. In the coming months, we will examine each in more detail.
What Are Their Numbers?
In order to really evaluate the business that you’re considering buying, you absolutely must see proof. This isn’t the time to take someone’s word for it. You need to see tax returns and financials. Period. How complete, organized, clear and accurate the financials are documented will also be an indicator of how well the company conducts business. It also makes for a more successful transition and smoother business operations in the long run.
How Big Is Their Customer Base?
Whoever said bigger is better ain’t lyin’. Beware of the manufacturing company that has one customer that makes up a big chunk of their income. What if their customer, despite the long-lasting relationship with them, goes amok when you assume the business? Your new acquisition could be at risk. Look for diversification in both numbers and industries.
Will They Oblige With the Transition?
Make sure the seller sticks around for a while. It will guarantee a fluid and orderly transition of the business, no doubt. A seller who commits to a reasonable period of time for training and transitioning assistance will ensure customer retention. If a seller wants to take the money and run - that’s a red flag.
That’s a golden ticket kind of business to buy. These businesses will probably go quicker and go for a higher price point but it’s definitely something to keep an eye out for. A company with an exclusive product or product line is an earmark of a Great Company for Sale.
Will The Primary Business Endure?
Perhaps this is the most important question to ask when looking at a particular manufacturing business to buy. The business in question may have all the trimmings: exceptional and verifiable numbers, customers far and wide, a cooperative and zealous seller with an extraordinary product line on the market. But if the main product is practically on its way out or nearing extinction – run in the other direction. As a manufacturing business buyer, you need to do your own homework and keep abreast of new technologies that are wiping out existing products. You don’t want to buy into an industry that’s being wiped out by constant innovation.
We will take a closer look at the top five things a buyer should look for in a potential manufacturing business purchase in more detail throughout this series. There are so many factors that go into an acquisition decision. Based on our 22 years in the business, we want to provide you with some stuff that we think is significant when entering into acquisition territory. We encourage you to do your own investigating but we are always here to help.