In this guide, we discuss how you can sell your fertilizer manufacturing company for fair market value. We break the sale down into steps and highlight the role your business broker should play throughout each step.
About The Fertilizer Manufacturing Industry
The fertilizer manufacturing industry has performed incredibly well over the past five years and industry growth is expected to continue. Pulled from Business Reference Guide, the majority of businesses within the fertilizer manufacturing industry engage in one (or more of the following):
- Nitrogenous or phosphatic fertilizer materials
Fertilizers from sewage or animal waste - Nitrogenous or phosphatic materials and mixing with other ingredients into fertilizers
- Mixing ingredients made elsewhere into fertilizers
- Manufacturing compost
Although there is exponential growth for the industry and excellent projections, now is the right time for many fertilizer manufacturing company owners to sell as there are industry fears of decreases in profit margins and demand concerns. For more context, here are the most recent fertilizer manufacturing industry numbers and projections:
- There are approximately 837 fertilizer manufacturing companies in the U.S.
- There was a 7.3% annual growth for the Fertilizer manufacturing industry from 2018 to 2023
- The fertilizer manufacturing industry generates $27.2 billion in annual revenue
- The annual profit for the fertilizer manufacturing industry is $1.9 billion
- Experts predict a sizable increase in annual growth (2.6%) from 2023 to 2028
How to Determine The Worth of Your Fertilizer Manufacturing Company
In most cases, the first step to determining your company’s value is looking at your financials. After all, this is the most important component of the sale for prospective buyers. Specifically, during a market approach, your SDE and/or EBITDA are applied to rule of thumb data for the fertilizer manufacturing industry, which is as follows:
- Fertilizer manufacturing companies sold for approximately 2.78 times the Seller’s Discretionary Earnings (SDE)
- Fertilizer manufacturing companies sold between 0.26 and 1.27 times the annual net sales
There are non-financial considerations that could lead to an adjustment of your company’s value during a market approach. For instance, if you have excellent growth potential, have a reputation for creating high-quality fertilizer products, and have an excellent workforce with no company lawsuits or controversies, then you may receive a much higher adjustment.
Your Guide to Selling Your Fertilizer Manufacturing Company
We understand that the process for selling your company can seem overwhelming at first. From determining your SDE during the valuation stage to negotiating with buyers, there are many complexities involved with the sales process. We are here to make things simpler. Below is a detailed review of the sales process, which we have broken down into the following stages:
- The planning and preparation process
- The marketing process
- The due diligence and closing process
By following a step-by-step guide you are better able to prepare and avoid feeling stress or overwhelmed during your sale journey. Of course, along with the assistance of your broker, you should personalize your strategy rather than rely on a one-size-fits-all approach.
The Planning and Preparation Process
Before putting your fertilizer manufacturing company on the market, you may want to take steps to enhance its value. This could include increasing your marketing efforts, streamlining business operations, and improving your financial documentation. Of course, you may also be satisfied with your value and decide to go to market right away.
Once you have made the decision to sell, there are several tasks that you must complete, including gathering all financial documents, creating a list of valuable assets, preparing a sales memorandum, and compiling a list of employees (with their respective roles) and vendors (with their respective contract terms). Additionally, it is important to obtain copies of leases and insurance policies. Your financial documents, such as tax returns, profit and loss statements, and balance sheets, are especially crucial for a smooth and efficient due diligence process once you find a buyer who is willing to sign a letter of intent. Your broker, attorney, and accountant can assist you with assembling all you need for the sale.
The Marketing Process
The marketing process for a fertilizer manufacturing company requires confidentiality. This means your broker must protect the privacy of the sale in order not to interrupt business operations or cause reluctance to make an offer among potential investors. They ensure confidentiality by only utilizing private channels and networks. They will also negotiate on your behalf until a deal you are happy with is finalized. This process ends when the buyer signs a letter of intent (LOI).
The Due Diligence and Closing Process
Due diligence offers an opportunity for the buyer to review the details of your fertilizer manufacturing company. This includes your daily operations, your financial information, and much more. However, this process should not be entirely open-ended to the point where the buyer can take an extended amount of time and drag the process out over several months. Instead, you should implement a due diligence timeline and map that outlines the process and provides a deadline for each stage.
As it pertains to closing the sale, there is not much you will need to do specifically (aside from attending and confirming the payment). There may be certain documents you need to bring, such as your business and bank information and a copy of the purchase agreement. After the sale is complete, you will transfer ownership of your fertilizer manufacturing company. This can be a lengthy process (depending on the size of your company) that may involve notifying employees, providing access to tall facilities, equipment, supplies, and online systems, updating business and insurance information, and more.
Work With Sigma Mergers and Acquisitions and Make The Sales Process Easy for You
Selling your business can be a daunting task. Let Sigma Mergers and Acquisitions take the guesswork out of the process for you. Contact us today and see how we can help you achieve fair market value. Specifically, we can provide you with a no cost business valuation and consult you on the best steps to take in your sales journey.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
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