We have seen a lot of recent interest of businesses in the manufacturing industry. Niche manufacturing businesses especially growing manufacturing companies with qualified skilled workers in place are commanding prices at higher than average multiples.
Milwaukee, WI (PRWEB) July 26, 2012
Stability, cash flow and growth seem to be the magic formula for businesses selling in today’s market. A recent article published by the BizTimes.com reported that companies with stability and proven growth and the capability to offset an uncertain economic environment are at the top of the list for buyers.
“Companies showing growth, successful retention of employees, a solid cash flow and organization are the most active to our buyers.” said Ed Krajcir, President of the Milwaukee office of Sunbelt Midwest. “We have seen a lot of recent interest of businesses in the manufacturing industry. Niche manufacturing businesses especially growing manufacturing companies with qualified skilled workers in place are commanding prices at higher than average multiples. Buyers want to see that a company can generate enough cash flow to make money as well as train and retain skilled workers. Long-term baby boomer business owners are turning 65 every day and looking to retire. Often there aren’t enough younger people in the pipeline to fill their places. Retiring business owners should know to complete closing a business for a desirable price they need to be able to show growth, stable cash flow and should offer extensive seller training. Today’s business owner might wonder how to value a business or close a transaction quickly in order to retire. Those business owners need to look closely at how their company stacks up not only with hard fast assets but with intangibles as well.” Said Ed. “By keeping these important intangible assets in mind, business owners can be prepared when it comes time to sell. These intangibles convey a value that financial statements alone do not. For many business owners, they reach a point where they burn out and want to sell as fast as possible. As long as a business owner has properly considered intangibles assets, their business will be ready to go to market when they are.”
Sunbelt Midwest recommends business owners look at the following 5 intangible assets to maximize the fair market value of their business;
1. Develop key employees. Buyers generally aren’t interested in paying a premium if the business relies on the business owner for its success. Delegate responsibility to key employees and involve key staff members in the decision making process. Being able to demonstrate that the company’s success is reliant on well-trained employees – not just the owner – often pays off big at the time of sale.
2. Document what you do. Be sure that job descriptions, operation processes, and strategic plans are documented so a new owner can emulate successful growth.
3. Build relationships. Name recognition, customer awareness and a business reputation is all part of business value. Even if a company doesn’t have many hard assets, diverse supplier and customer account relationships are key.
4. Improve cash flows. A potential buyer will typically want to see the businesses financials to know that the business can make cash. Business owners should drive all income to the bottom line when preparing to sell.
5. Review the business assets. Sell off or dispose of unproductive assets or unsalable inventory in particular assets that cross over from business to personal use.
About Sunbelt Midwest
Sunbelt Midwest is an elite division of Sunbelt, the largest organization of business brokers and M & A professionals in the world. With five offices in Minneapolis, Minnesota; Chicago, Illinois; and Milwaukee, Wisconsin, Sunbelt Midwest is a premier brokerage. The business brokers and M & A intermediaries of Sunbelt Midwest, consistently rank in the top performers of Sunbelt International. Sunbelt Midwest is trusted with coordinating all of the national franchisor relationships for Sunbelt. Because of this interaction, Sunbelt Midwest has a unique ability to market businesses throughout Sunbelt internationally. Sunbelt Midwest truly has a GLOBAL reach!