Likely Buyers
- Larger manufacturerAdds capacity and customers to a plant it already runs.
- Industry veteranKnows the work and wants to own a shop instead of managing one.
- Search fund or private buyerBuys a stable shop and hires a plant manager.
Machines, age and upkeep
Buyers walk the floor and ask how old each machine is, what it earns and what it will cost to replace. Shops with well kept equipment and service records sell more easily.
Because buyers often deduct maintenance spending from depreciation add backs, expect to defend your numbers line by line.
Customers and backlog
A shop that depends on a single large customer carries real risk. If a few customers account for more than about 15 to 20 percent of sales, expect a lower price or a deal that pays part later.
A written backlog and repeat orders help, since they show work that does not depend on the owner's phone calls.
Skilled people are scarce
Experienced machinists are hard to hire. A buyer will want to know who runs each machine, who programs jobs and whether any key person plans to leave after the sale.
Write down job routings and setup notes so the knowledge lives in the shop, not in one head.
Quality records and the building
Aerospace, oil field or medical customers may require quality certifications. Keep those current, since a lapse can freeze orders during diligence.
Many shops own their building. Our note on owning the building covers whether to sell it, lease it back or keep it.
Where to start
Ask your CPA for recast statements, then request a free value check. Buyers also read about asset and stock sales before an offer.