Selling lower middle-market manufacturing businesses nationally affords me the opportunity to speak with some of the best and most qualified buyers in the country. Many find their way to us after an attempted acquisition falls apart and they search for a manufacturing M&A specialist (intermediary). On the heels of their disappointment, we hear the horror stories of wasted time, resources and energy devoted to trying to close deals that were destined to fall apart.
There’s a better way
Common Problems In Manufacturing M&A Deals
Many of the complaints these buyers have could be eliminated if the intermediary properly vetted their clients and took the time to gather the appropriate information in advance of listing the company. Here are the most common complaints we hear:
The broker is advertising a business that is not exclusively listed with them. As a result, the business owner is not fully engaged with the broker and has not provided the information needed by a quality buyer to make an acquisition determination.
The business owner has not been vetted psychologically and is not fully committed to selling.
The broker provides inaccurate information on the cash flow. This can be the result of Seller deception, Broker deception, or simply an intermediary who didn’t know how or take the time to fully investigate the financials.
Difficulty getting information beyond the initial business write-up including sector and customer concentration, receivable aging and A/R practices, employee census, I/T systems, working capital and CapX requirements.
Broker has not educated the client on the current market conditions and/or Seller has unreasonable price expectations.
Broker has not educated Seller on the due diligence process and the appropriate documentation required for EBITDA or SDE.
The Manufacturing Business Buyer’s Bill Of Rights
These are just a few of the most common complaints we hear. There is a better way. At Accelerated Manufacturing Brokers we have a Buyer’s Bill of Rights. If you’re in the market to buy a manufacturing business, here’s what you can expect. The businesses we advertise are always exclusively listed.
We have a solid working relationship with the Seller; we’ve likely been working with them for months to learn about their business before taking it to market.
Our clients are ready to sell. We’ve vetted them, pushed, prodded and interrogated. If they’ve hesitated, we make them wait until they are READY.
The cash flow information we provide is accurate and can be fully documented. If a line item in the SDE chart can’t be proven, it doesn’t make our chart, period.
Although we provide information to potential buyers in stages for the protection of our clients, we likely already have answers to almost every question you’ll ask, because we won’t take a listing unless this information is provided to us in advance. What types of metals does the target company work with and in what tolerances? What’s the customer and sector concentration? What benefits are provided to the staff? What is the make and model of the manufacturing equipment and has it been serviced regularly? All this, and so much more, we ask in advance of agreeing to take the listing. We aim to work with quality Sellers and shorten the sale cycle for the benefit of all.
Our clients have an opinion of value that is in line with the current market. To take a listing with a client who has unreasonable price expectations is a complete waste of our time, and the time of every potential buyer we bring to the table. We won’t waste your time.
Our client will be prepared to respond quickly to requests during due diligence. They already know what to expect because we’ve been communicating it consistently during the process.
Our clients understand that although we represent them, we have an obligation to also treat buyers fairly. It’s an obligation that we take seriously. We’ve got a strict “No Jackass” policy that applies to both Sellers and Buyers. We work with quality people on both sides of the transaction.
If you’ve experienced anything other than an M&A expert/intermediary who understands manufacturing, respects your time and provides a level of information more indicative of middle-market deals, we invite you to get to know us better. If you’re seeking a specific type of acquisition within the manufacturing sectors, we can help.
Do you have an M&A intermediary nightmare story? We’d love to hear from you. Tell us about it below!
Frances Brunelle is the founder of Accelerated Manufacturing Brokers, Inc., which specializes in the sale of lower middle-market manufacturing companies nationally. Fran and her team help to ensure the continuity of U.S. Manufacturing by transitioning ownership to the next generation of entrepreneurs. Recently Fran was named to 2020 Most Influential Women in Mid-Market M&A (Mergers & Acquisitions). Fran will also be the host of WAM (Women and Manufacturing) podcast, a Jacket Media production. Fran writes on topics that help manufacturing business owners prepare their companies for sale and navigate the sale process to ensure a positive financial result in support of their retirement.