May 29, 2020 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

Articles for Entrepreneurs


Selling Specific Business Types


Selling a Manufacturing Business

Selling a manufacturing business presents special challenges and obstacles. Here are a few things you need to know about the process.

Small manufacturing businesses have an important function in the U.S. economy.
(article continues below)

Unlike large manufacturers, small business manufacturers are flexible and nimble, capable of quickly responding to changing conditions and exploiting opportunities in the marketplace.

But when it comes to business sales, small and large manufacturers face the same set of challenges. Manufacturing businesses are different than retail or service companies, especially in the way they prepare for ownership transitions. Although they may have intangible assets, most of their value rests in the equipment and capital assets they use to manufacture their products.

Selling a manufacturing business is dicey because you want to avoid a valuation based solely on the value of your assets. To do that, you'll need to make the case that the companies' intangible assets will translate into bottom line profits. Here are a few things to consider along the way . . .

  • Market position. Buyers are attracted to manufacturing businesses that have an established presence in the marketplace. During the months and years leading up to the sale, make an effort to capture the highest possible percentage of market share. The payoff is that your market position represents an intangible asset that with real value to buyers.
  • Business cycle. Most manufacturing firms have a predictable life cycle. During the early years, the business may have burst onto the scene with innovation products and processes. But as time goes by, innovation tends to fall by the wayside. An innovative company culture is an intangible asset that needs to be nurtured through an intentional effort on the part of owners and managers.
  • Asset condition. Equipment maintenance schedules can increase the value of your tangible assets. Instead of being appraised at average values, well-maintained machinery can be valued at the high end of the scale but only if you can support the valuation with maintenance records.
  • State of technology. It's not hard to understand why prospective buyers shy away from businesses with outdated technology. To compete in the marketplace, they'll need to invest cash in technology upgrades, not to mention the time and effort that is involved with retraining the workforce on the industry's current technologies. Make the investment in new technology before the sale you'll likely recover the cost plus a dividend in negotiations.
  • Consolidation. The manufacturing sector continues to experience high rates of consolidation. When it's time to sell your business, approach buyer candidates with a "more than a sum of the parts" argument for consolidation.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Selling a Service Business
Selling An Online Business

Conversation Board

We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.

Questions, Comments, Tips, and Advice  Code Image - Please contact webmaster if you have problems seeing this image code
Problem Viewing Image
Load New Code



Additional Resources for Entrepreneurs

Search Engine Marketing

Social Marketing Optimization

Business Forms

Business in the Jungle - Business in Fiction - Negotiating

Radio Ad Costs

Newspaper Advertising Rates

City-Specific Resources for Entrepreneurs

Small Business Insurance

Global Entrepreneurship

China & Entrepreneurs