If you are selling your machinery and metal business, the sale may have already been planned for a number of years so that you can present it to market at the optimum time, and in the best light.
This planning stage is crucial to ensure you reap the rewards of the time and money you have invested in your business, and also helps you to navigate through the various stages of the sales process with fewer problems.
The problems that you might face when selling a business can be addressed using professional help and support. This could be accountancy or legal help, for example, or business sales brokerage guidance.
The sale of a business requires close attention to detail throughout so that nothing is missed. Professional experience in the sector concerned, as well as an understanding of how the process works, can also make the difference between success and failure.
So before we look at the sales procedure in more detail, what are some of the challenges faced by your sector that could derail the process, or reduce the final price offered by a buyer?
The innovative and dynamic environment in which manufacturing companies in general operate, can be both a blessing and a curse. The industry is constantly changing as new technology allows us to adopt faster, cleaner, and more cost-effective operational processes. But without the money to make such investments in new systems, it is easy for companies to fall behind and lose their market share to competitors.
Brexit has brought into question the entire future of trade with the EU. As yet, nobody knows what will happen in relation to trade within the European Union – whether the UK will receive any form of preferential treatment – but whatever the outcome, prospective purchasers might be inclined to treat the situation with caution rather than a positive mindset.
The Brexit referendum resulted in a depreciation of the value of sterling, which in turn increased the cost of imports into the UK. This narrows profit margins and makes it more difficult for companies to increase profitability.
Managing waste in this sector is an ongoing challenge. But maybe you have adopted the ‘lean’ methodologies that help to reduce or eliminate waste? If so, this could provide an attractive proposition for potential buyers as it is intended to reduce costs and make waste management practices more efficient.
Complying with ever-changing regulations and new legislation places an administrative, and ultimately financial, burden on machinery and metal manufacturing businesses. Without adhering to the regulations on waste management or sustainability, for example, the value of your business is likely to be lowered.
When you place your business on the market, making sure it is performing at its best is key for a successful sale. But it can take a long time to reach this stage, especially if your business has failed to meet its statutory obligations in the past.
Perhaps your company has a chequered history with HMRC, involving penalties for late filing or payment of taxes, for example. If this is the case, it could lead to the value of your business being lowered in the eyes of a potential buyer.
You may be able to negotiate a higher price for your business if you are prepared to provide warranties and/or indemnities to your buyer. These reduce the buyer’s risk in purchasing the business, but it is crucial to obtain professional advice prior to making any agreements.
An earn-out arrangement involves you staying on in the business after the sale has gone through. It can help the transition process, and means that part of the price paid for the business by the buyer is deferred, and depends on its future performance.
If you would like more information on selling your machinery and metal manufacturing business, our professional team at Selling My Business can help. Being experts in this sector, we are able to provide tailored advice and ensure the selling process is handled professionally throughout. Please call one of the team to arrange a free consultation, where we can talk through the potential issues for your own business sale.
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