Manufacturing
Manufacturers are attractive to buyers because they have assets, skilled staff and customers who cannot easily switch. They are also complex to value, because equipment, inventory, real estate and earnings all carry value and can be overstated. We help BC manufacturers prepare for a sale and help buyers see what they are really acquiring.
How the money works
- Equipment has real value but also replacement and maintenance cost buyers subtract
- Customer concentration is common because capacity is sold to a few large accounts
- Skilled trades and supervisors are hard to replace, so staff retention drives value
- Premises are often owned by the founder and must be valued and leased separately
The moves we make
- Value on normalised earnings with equipment, inventory and premises treated correctly
- Document production systems, quality records and key staff so the operation transfers
- Separate the real estate and charge a market rent before valuation
- Structure financing that uses equipment and premises as security realistically
Assets and earnings together
A manufacturer is valued on earnings like any business, but the asset base sets a floor and shapes the financing. Buyers look at the age and condition of equipment, what capital spending has been deferred, whether inventory is current and whether the balance sheet matches the shop floor. We normalise earnings, assess the equipment with the owner's maintenance records and show the buyer and lender a picture that reconciles. Deferred maintenance found in diligence is the most common reason manufacturing deals are repriced.
The building and the business
Many BC manufacturers own their premises through a separate company. The operating business is valued on earnings after a market rent, and the property is appraised independently. Owners can sell both, sell the business and keep the property as a landlord, or sell the property and lease it back before selling the business. Each route changes the buyer pool, the financing and the tax, which your CPA assesses. We work alongside licensed realtors and your lawyer on the property side.
Management buyouts in manufacturing
Manufacturers often sell best to the people who run them. A plant manager and a sales lead who know the customers, the machines and the staff are a lower-risk buyer than an outsider, and lenders know it. The team rarely has the full price, so we structure a mix of their equity, bank debt secured on the assets and a vendor take-back, test whether the business can carry it and plan the founder's transition. Your lawyer drafts the shareholder and security agreements.
Questions from manufacturing owners
How is equipment valued in a sale?
As part of the business when it supports the earnings, with condition and deferred maintenance adjusted. Asset value sets a floor and shapes financing. An appraiser is used where the lender requires it.
Can my management team buy the company?
Often yes. We value the business, test its debt capacity and structure a buyout with management equity, bank debt and a vendor take-back. Your lawyer documents the agreements.
Should I sell the building with the plant?
It depends on your income needs, the buyer pool and tax. We model selling together, keeping the property as landlord and a sale-leaseback with your CPA.
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.