Preparing Your Manufacturing Business for Sale

If you're considering selling your manufacturing business in the next one to two years, you're in a far stronger position than an owner looking for a quick exit.

Time creates options. Twelve to twenty-four months allows you to improve profitability, reduce risk and present the business properly. The owners who achieve premium outcomes almost always prepare early.

Here's where to focus.

1. Understand What Drives Value

Manufacturing businesses are typically assessed on a multiple of adjusted EBITDA. But the multiple isn't fixed. It moves based on risk.

Buyers will look closely at customer concentration, consistency of earnings, management structure, condition of plant and equipment, and how dependent the business is on you personally. Two businesses with similar profits can sell for very different prices depending on those factors.

A realistic appraisal early in the process gives you a baseline. From there, the goal is to reduce risk and improve earnings.

2. Tighten Financial Control

Clean, reliable financial reporting builds buyer confidence.

Over the next year or two, ensure monthly management accounts are accurate and timely. Separate personal expenses clearly. Normalise your own wage. Make sure stock and work-in-progress reporting is accurate and defensible.

Manufacturing buyers pay close attention to gross margins. If they fluctuate, you need clear explanations, whether it's raw material pricing, labour efficiency or pricing pressure. If you can't explain movement in margins, a buyer will assume instability.

Strong reporting gives you leverage in negotiations.

3. Reduce Owner Dependence

One of the most common issues in manufacturing sales is heavy owner involvement.

If you are still quoting jobs, managing production and holding key customer relationships personally, the business is harder to transfer. Buyers see that as risk.

Use the preparation period to build internal capability. Strengthen your production supervisor. Document quoting systems. Create clear operational procedures. Shift day-to-day decision-making away from yourself where possible.

A business that runs without the owner commands stronger interest and often a better multiple.

4. Improve Revenue Stability

Customer concentration can materially affect deal structure.

If a small number of clients account for most of your turnover, that doesn't make the business unsellable, but it does affect how buyers approach risk. Where possible, diversify. Formalise supply agreements. Strengthen recurring order patterns.

Buyers pay more for predictable revenue than for one strong trading year.

Momentum matters. If revenue and margins are trending upward at the time of sale, confidence increases and negotiations become easier.

5. Review Plant and Equipment

Buyers will inspect your equipment carefully. They want clarity on age, maintenance and remaining useful life.

If critical machinery is unreliable or outdated, delaying replacement can hurt more than it helps. Buyers typically discount for perceived risk more heavily than the actual cost of upgrading. On the other hand, well-maintained equipment with clear service records strengthens your position.

Document maintenance schedules and ensure compliance requirements are current. In manufacturing, gaps in safety or compliance raise red flags quickly.

6. Manage Working Capital Properly

Manufacturing businesses are working capital intensive. Stock levels, work-in-progress and debtor days will be examined in detail during due diligence.

Before going to market, reduce obsolete inventory and tighten debtor control. Ensure stock valuation methods are consistent and defensible. Buyers expect a "normal" level of working capital at settlement, and poor reporting can lead to disputes late in the process.

Clean working capital management reduces friction and protects your price.

7. Plan Your Exit Role

Be clear about your intended involvement after sale.

Some buyers will expect a structured transition, particularly where technical expertise or customer relationships sit with you. Others will prefer a short handover if management depth is strong.

Clarifying this early helps shape buyer targeting and avoids unnecessary negotiation later.

8. Preparation Creates Leverage

The difference between an average result and a strong result in manufacturing sales usually comes down to preparation.

Consistent earnings, reduced owner reliance, reliable equipment, solid systems and stable customers create confidence. Confidence drives competition. Competition drives price.

If you are considering selling your manufacturing business in the next 12 to 24 months, now is the time to start preparing, not when you're ready to exit.

SBX Business Brokers works with manufacturing owners well before they go to market. We identify practical steps to strengthen value, reduce risk and position the business correctly for sale.

If you want to understand what your manufacturing business is worth today — and what it could be worth with the right preparation, contact SBX Business Brokers for a confidential discussion.