At some point, most business owners consider either expanding their business in some way or selling it. A common way to do this is through a merger and acquisition. This can be a great way to gain assets, grow your marketplace, and build new clientele. It can be a final profit for all of your hard work for a seller of a business. Often the hesitation to move forward with M&A stems from the question, “Is it the right time?” Both a seller and potential buyer may have this issue due to not understanding the process. Here are a few steps to take to make it a good time for a merger in manufacturing, no matter the state of your company.
Create a strategy and set your criteria.
The best way to begin the process is by formulating your plan. Like making your business plan, having a clear idea of the type of customer you are looking for is important. Consider case sealers manufacturers and the people who purchase their products. They need a strong packaging line, a case erector, and equipment for the entire packaging process. When considering a company that uses a case sealer as your potential buyer, you’ll want to know the business purpose for expanding. This helps to identify profit margins, customer base, and the general geographic location of any merger. In the case of a carton sealer, the right buyer would need to have some end of line packaging needs.
Find a potential company and start the M&A plan.
Once you’ve built a solid plan for selling your business or acquiring new assets, it’s time to find potential companies. This is when you use the criteria you’ve previously set out to narrow your choices down. The type of business comes into play. If you are in the “sell my business” category, you want to identify a prospective buyer that will meet your sale price. And for this, you can take help for reputed services such as Wilson Browne Solicitors that will assist you in all the legalities related to buying or selling as business.
At this point, you might want to enlist the help of a broker, accountant, or attorney to help cover your financials and assets. Additionally, they’ll help you put an appropriate valuation on the cost of your business. Remember, if you enlist the aid of a third party, there are often fees to pay. Though, the right team and the right plan can help you save money on your tax returns.
Execute valuations and begin negotiations.
With the right team in place and qualified buyers identified (or sellers depending on your intentions), you’re ready to progress to talking money. In manufacturing, particularly with automatic case sealers, the amount of money can change greatly. If the packing equipment is dated, you might find some cost savings. Do an accurate evaluation of the potential customer before starting negotiations.
Due Diligence for M&A
At this stage of the process, you are going through the arduous task of confirming, correcting, and readjusting the specifications and assessments. This is a comprehensive and detailed look at all aspects of the business sale. This process looks at the customer base, labor costs, assets, liabilities, and every financial aspect of the company being sold. This is often the longest stage of the selling process due to how long it takes to complete.
Contracts, a financial plan for the acquisition, and closing.
As long as no major issues arise during the previous stage, you’re ready to move on to the final contracts being drawn. This establishes any commission for your team, final sales price, and all stipulations agreed upon by both parties. You’ll have your finances for the merger. The final stage includes how you’ll integrate the new resources into your manufacturing company.