As we approach the close of 2016, many manufacturing business owners are examining whether 2017 will be the year that they finally will be retiring.
2016 was one of the best years on record for the sale of manufacturing companies. In fact, our sales increased by over 400% from the prior year. Inevitably, January is one of the busiest times of the year for us, as owners vow to keep their New Year’s resolutions and transition into retirement. If you’ll be retiring from manufacturing in 2017, here’s why you should be planning now and what you should be doing.
4 Reasons You Should Plan Now If You Want To Sell Your Manufacturing Company in 2017
1 - Competition
It’s clear that more manufacturing business owners are transitioning into retirement. That means competition for appropriate buyers is fierce. Buyers will have more choices in 2017. The longer you wait, the more competing businesses will be on the market.
2 - Interest Rates
Interest rates may rise. President-Elect Trump was very critical of the Fed during the election cycle. Many experts think interest rates will likely rise during his presidency. The higher the interest rates, the fewer business acquirers can buy. When money is cheap (like it is now), buyers can afford to pay more for businesses.
3 - Get a Head Start
It takes time to market and sell a manufacturing business. Usually 8 months to a year. If you want your sale to be concluded in 2017, you’ll need to hit the ground running in January. That means having marketing materials and “packaging” completed before the end of 2016.
4 - Don't Wait
Many companies that expand through acquisition get their new budgets in January. This is another reason why there is always an uptick in M&A activity at the start of the New Year. You don’t want your company getting to the game late.
7 Things You Should Be Doing NOW To Sell Your Manufacturing Company In 2017
1 - Professional Valuation
Get a professional valuation of your business so you know what to expect.
2 - Specialized M&A Intermediary
Research and choose a business broker or M&A professional that specializes in the sale of manufacturing companies nationally. Recent research shows that buyers of manufacturing businesses are coming from more than 100 miles away. The local guy might not be the best choice for appropriate market exposure.
3 - Financial Planning
Speak with your financial planner and make sure that the retirement lifestyle you expect will be secured with your current savings and the proceeds from the sale of your business.
4 - Tax Returns & Financials
Alert your CPA that you’ll want your tax returns and financials statements done as early as possible after the conclusion of the year. Your broker will need a minimum of 3 years of each.
5 - Documentation
Make sure your operating procedures are well documented. Buyers want to be assured of a smooth transition.
6 - Curb Appeal
Clean up your facility! Both the offices and the manufacturing plant should be looked at from the buyer’s perspective. It’s not just about the numbers, curb appeal matters too.
7 - Transition
Determine how much time you’ll be willing to provide in training and transition assistance to a new owner.