5 Tips Selling a Manufacturing Business

If you are a mid-market business owner in California and looking to sell your manufacturing business for great value, we have identified the best tried and true tips to get you started.

Continue reading below to learn about the 5 best tips for selling a manufacturing business.

Sell a Manufacturing Business

If you own a middle-market business or lower middle-market manufacturing business and are considering selling, it is important to do so at the right time. 

Even if your California business is currently successfully drawing value and operating without disruption, selling at the right time is imperative to receiving the best possible price from your investment. This will allow you to start a new venture or even consider retiring early if you want to.

Whether you are looking to sell your business as soon as possible or are simply considering it as an option for the future, preparing your business exit strategy and getting ready for the transition ahead of time by taking clear steps will help ensure that the sale goes through without a hitch. 

Think Like a Buyer

Thinking like a buyer is one sure-fire way to prevent any setbacks that could arise. When thinking like a buyer while preparing for a middle-market business sale, it would be beneficial to consider the following:

• How would an outsider understand that your business is a good venture?

• What would you look for if you were to buy a new business?

• What could be some red flags about your business that make potential buyers lose interest?

• How can you fix any issues or concerns that might come about?

• Does the business appear prepped, put-together, and ready to be sold? 
  

Process of Selling a Manufacturing Business

Once you’ve made the final decision to sell and have put yourself in the shoes of the buyer to consider any potential future problems, it is time to dive into the process of selling your manufacturing business. 

While starting this process may feel daunting, by taking the steps listed below you will be able to prepare for success.

Get Your Business Summary Paperwork Ready

The first step in the process of selling your business is to get your business summary paperwork ready. This can be done by making a manual of operations for each process that your business goes through. 

When creating an operations manual, it is usually best to work with your staff and employees to compile the necessary details of daily duties and goings-on. Knowing exactly what each of your employees spends their workday doing will help you have a better sense of their purpose and effectiveness. 

Having your business summary end operations manual ready for review by potential manufacturing business buyers will help impress these clients and entice them into a faster ownership change should they choose to buy. Your business’s value will also increase, offering a higher point of sale and more profit for you.

Train Your Non-Retiring Staff to Operate on Their Own

Whether you are new to the manufacturing business that you own or have been the business owner for a long time, your employees are a huge part of what makes your business viable. You likely have some employees that have been with the business for many years and have ample experience and knowledge about its operations.

You must keep your most knowledgeable and dedicated employees as staff at your business throughout the process of the sale. A high turnover rate, many employees leaving, or the most knowledgeable staff giving in their resignations can all raise cause for suspicion.

Make it clear to your employees that you plan to keep them on through the sale and prepare them to run the business without you. If you have many employees that will be ready to retire soon, offer them an early retirement package so that they won’t feel the pressure to stay throughout the ownership transition. 

Check Environmental Law and Legal Documents

If you are considering selling your manufacturing business in California, all state, local, and federal rules and regulations need to be followed to complete accuracy. Here are more details on how selling a business in California is different.

If any legal protocols are not properly followed, buyers will not show interest and your sale will fall through. 

Check whether your business is compliant with all required laws. If not, repair the problems and rectify the situation with a knowledgeable team of legal representatives so that you will be able to sell your manufacturing business in the future.

Fulfill All Remaining Financial Obligations

If your manufacturing business has any outstanding fines or transactions that must be fulfilled, resolving them as soon as possible will help to speed up the selling process. If your manufacturing company owes money, a buyer simply will not want to take on that debt until it is paid back.

Contact Your CPA and Finalize

Once all of your debts have been paid, employees have been trained and briefed, and your paperwork has been completed, you should contact your CPA. Your CPA will then look at all of your compiled information and inform you whether your business is tax-compliant while repairing any errors found.

Your CPA will create records for the sale, finalize the process, and help you prevent owing a lot of back taxes on your sold business.

Here is more on a question that a lot of manufacturing business owners ask: If I sell my business, how much tax will I pay?

Manufacturing Business Broker

M&A advisors are needed for selling a manufacturing business because they tend to work very closely with owners, CPAs, and accountants. This collaboration process is also known as the M&A Deal Team. They not only ensure that the value of the business is clear, but they also help the owner enact any necessary changes up to standard.

Your M&A advising firm will represent both you and your potential buyer, helping navigate complicated legal issues and accounting complications should they arise. 

The 3 top areas where a manufacturing business broker can help successfully plan and sell a manufacturing business are:

• Providing advice and guidance on the storing and/or selling of goods before the sale

• Estimating an accurate value for the business while preparing for the transaction - Guide to business valuation methods

• Showing the business to potential buyers and fulfilling the actual transaction process - Marketing the deal
  

Recap Summary

It's important to do extensive research so that you understand the selling your business price tag that you should be getting. There are some common pitfalls that entrepreneurs sometimes encounter when they're selling a manufacturing business in California. Here's what you'll want to avoid:

1. Waiting a long time when considering the sale.

2. Not being prepared with paperwork.

3. Forgetting to develop and sign a non-disclosure agreement.

4. Selling to buyers who have not been pre-qualified.

5. Misrepresenting what your company does in any way.

6. Attempting to sell without communicating with your partners and employees.

7. Pricing your business far too high above value.

If you are a retiring business owner looking to exit your lower middle market manufacturer in California, here are six tips to get you started:

1. Don't wait until the last minute to start planning your exit. The process of selling a lower middle market manufacturing business can take a long time, so it's important to start early.

2. Have a clear idea of what you want to get out of the sale. Know your goals and what you're willing to negotiate.

3. Know what's your company's worth. This is an essential step to take when planning to sell your manufacturing business in California.

4. Choose the right type of buyer. Not all buyers are created equal, so do your research and find the right one for your business.

5. Be prepared for a lot of due diligence. M&A buy-side due diligence is when buyers will want to know everything about your business, so be ready to provide documentation and answer questions.

6. Be flexible with the terms and conditions of the deal. It's important to be open to negotiation to get the best possible deal for your business.

Rogerson Business Services, also known as, California's lower middle market business broker is a sell-side M&A advisory firm that has closed hundreds of lower middle-market deals in California. We are dedicated to helping our clients maximize value and achieve their desired outcomes. 

We have a deep understanding of the Californian market and an extensive network of buyers, which allows us to get the best possible price for our clients. We also provide comprehensive support throughout the entire process, from initial valuation to post-closing integration. 

Our hands-on approach and commitment to our client's success set us apart from other firms in the industry. If you consider selling your lower middle market manufacturing business, we would be honored to help you navigate the process and realize your goals.

If you have decided to value and then sell your lower middle market manufacturing company or still not ready, get started here, or call toll-free 1-844-414-9600 and leave a voice message with your question and get it answered within 24 hours. The deal team is spearheaded by Andrew Rogerson, Certified M&A Advisor, he will personally review and understand your pain point/s and prioritize your inquiry with Rogerson Business Services, RBS Advisors.

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