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How to Sell an Engineering Manufacturing Business

Learn how to effectively package your engineering manufacturing business for a profitable sale.

Contrary to the cultural hysteria undermining legacy American industries, manufacturing remains a top five economic driver. Manufacturing of consumer goods — what Investopedia calls “nondurable manufacturing” — adds over $850 billion to the U.S. economy each year, which accounts for 6 percent of the country’s total GDP.

Already this should be encouraging to anyone looking to sell their manufacturing business, but you’ve taken your business a step further. Engineering manufacturing businesses are especially valuable because they offer the capability to design and create products in-house, and this is a formidable advantage when packaging your business for sale. As long as you know how to properly highlight your assets, and surround yourself with the right team, you’re poised to manufacture a successful sale.

Know your value

The sales process will begin with an appraisal in which you value your business. To uncover this information, you will need to do some benchmarking of the industry at large. Find out what businesses of this nature are valued at today, how much they have sold for in the past, and use this data to ballpark your own value.

Of course, all engineering manufacturing businesses are different, and as the owner you’re in possession of a diversity of assets that could drive the asking price. In essence, you own two, discrete businesses — a design business and a manufacturing business — and this value should be accounted for as you go through the appraisal process.

You might have more value than you think. Consider the following assets that could boost your asking price:

  • Infrastructure : Infrastructure is a necessary, limited, resource within the manufacturing industry. You’re on the profitable end of a supply-vs.-demand imbalance — you possess the systems necessary to design, create, and transport products. That’s a unique asset that feeds into the supply chain and is worthy of sales leverage.
  • Equipment : Not only can you boast about your cutting-edge manufacturing equipment, but you also have the added benefit of offering design equipment in your sales negotiations. CAD, virtual reality, design terminals, and more — your sale can include all the gadgets needed to design a product and build it too.
  • Personnel : Your business is nothing without its employees. You own an incredibly variable business, and your personnel likely possess a diverse set of skills reflective of the industry. This is valuable sales leverage, so be sure to highlight the versatility of your workforce. From design to manufacturing, your employees offer the skills to run a one-stop product workshop. You can’t put a price on that. Be aware, you will need to make sure that all staff members remain qualified, skilled, and well-versed in what they do.
  • Governmental aid : some municipalities offer governmental aid or economic development incentives to manufacturers. These advantages should be made clear during negotiations, or even highlighted in contracts, so buyer prospects understand the minutiae of the sale that might benefit them.

The resources you possess to both design and make your own products give you a competitive advantage over other manufacturers. As you proceed into the sales process, appreciate the novelty of your situation. More importantly, be sure your prospects also realize how lucky they are to be a part of negotiations that could lead them into the rarefied air of the engineering manufacturing industry.

Find help where you need it

You’ve run a successful business up to this point. Congratulations. But, now is not the time to be prideful. Don’t let hubris get in the way of selling your business — recruit help in the areas that you might lack.

For example, there are rules and regulations in every city and state that will affect sales. Depending on the area in which you’re selling, you could run into zoning or real estate obstacles. Your district might impose certain environmental laws or tariffs on particular products.

Of course, you’re not an expert on local manufacturing legislation, real estate, or environmental policy, but that’s okay. These considerations can be sorted out by legal professionals so you can focus your attention on what you do best: making your manufacturing engineering business sellable.

You’re an accomplished entrepreneur, but you might not be a salesperson, and that’s okay. Focus your sales efforts where you can affect the greatest control and where you add the most value to negotiations. Leave marketing, legal, real estate, etc. to the sales experts you can recruit.



Bruce Hakutizwi

About the author

USA and International BusinessesForSale.com Manager for BusinessesForSale.com, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.

@BizForSaleUS

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