When manufacturing business owners are ready to sell, they typically research local business brokers or M&A professionals in their geographic area, interview a few and with their fingers crossed make the decision as to who will likely be the best advisor to get the job done. While they should be commended for doing their homework, this method is likely to bring less than desirable results. This approach is missing a vital component needed for success. Here’s why choosing an M&A Specialist can accelerate the process.
Who Is Currently Buying Lower Middle Market Manufacturing Companies?
As published in the Market Pulse Report by Pepperdine University and the Graziadio School of Business, a great majority of lower middle market buyers are acquiring from more than 50 and 100 miles away from the target company. This has held true at Accelerated Manufacturing Brokers, Inc. as all but one company sold in the last 2 years went to a buyer from another state. If the best buyers are extending their search beyond their home state, you better have an M&A Specialist who has more than just a local following. If they don’t, your business may never be presented to the most qualified buyers.
Geographic Limits Are Not Ideal in Manufacturing M&A
This article was sparked by recent events in my own M&A practice. Two listings, in particular, came to us after local brokers couldn’t achieve results. Both brokers were professionals with extensive experience. Each had an extensive time to sell the companies they were engaged with. Both failed, but we were able to achieve quick results. The issue wasn’t their lack of professionalism; it was their geographic range. In both cases, multiple buyers for each listing came from out-of-state. We were able to get the job done because we didn’t limit the search for the right buyer to our client’s home state.
Lack of Sector Experience & Exposure Causes Problems in Manufacturing M&A Deals
Geography isn’t the only challenge most business brokers experience when selling a manufacturing company. It’s lack of sector experience. How do you figure out who a good strategic fit might be, when you don’t understand a client’s manufacturing process and their potential growth areas? Sector experience on a national basis provides exposure to buyers that a local non-M&A specialist will never have. With the click of a button, my team can notify the best buyers in the nation about a new listing for any number of manufacturing categories including:
- Medical Instruments
- Pump & Valve
- Heavy Equipment Repair
- Testing Equipment
- Scientific Instruments
- CNC Components
- Screw Machine Products
Specializing in the manufacturing sectors and selling nationally means that we know who is seeking to expand through acquisition and what they can afford to pay. This means that we can sometimes connect an eager buyer with an acquisition that perfectly matches their criteria with record speed. It’s not just what we know, (industry knowledge), it’s who we know, (the best-qualified manufacturing buyers in the nation).
A Manufacturing M&A Specialist Will Have A Greater Success Rate
One of the largest multiple listing sites which brokers use to post their listings provides annual statistics on the number of businesses listed vs. actually closed. It’s no surprise that only about 40% of businesses listed on their site actually sell. That’s a 60% failure rate! Specializing in the manufacturing sectors and selling nationally allows us to dramatically increase the close rate. If you’re a lower middle market manufacturer and you’re ready to sell your company, seek an M&A Specialist to accelerate the process!