The marine products manufacturing industry has excellent potential, especially for established companies that have carved out their own market position. In this guide, you will learn how to determine the value of your marine products manufacturing company and sell it for fair market value.
About The Marine Products Manufacturing Industry
Marine product manufacturing primarily involves building boats. This includes boats for personal use as well as commercial boats. It does not, however, include boats designed and manufactured in shipyards. This industry can include more specialized marine products as well. A new owner should ideally have experience with manufacturing. If they do not, then an extensive transition period may be necessary.
There is some competition for established companies. However, companies that dominate a particular niche within the industry have less risk. There is also a recent trend of marine product manufacturing increasing domestically, and the demand among consumers has increased since the pandemic. It is also an incredibly enjoyable industry for those who love boats and other marine products.
What is The Valuation Process for a Marine Products Manufacturing Company?
There is enough sales data for marine products and boat manufacturing companies to formulate reliable rule of thumb data (see below). However, rule of thumb data by itself is not enough for a comprehensive market-based valuation. In addition to determining your financial metrics and applying them to rule of thumb data, you (and your broker) should also consider non-financial factors such as your unique competitive advantage, niche, growth potential, workforce quality, and reason for selling.
- Marine products manufacturing companies sold between 3.00 and 4.31 times the Seller’s Discretionary Earnings (SDE)
- Marine products manufacturing companies sold between 7.56 and 9.46 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Marine products manufacturing companies sold between 0.22 and 0.46 times the annual net sales. Some companies sold for as high as 1.22 times the annual net sales.
What is The Sales Process for a Marine Products Manufacturing Company?
The sales process can, at first, seem overwhelming. It helps to break it down into steps, which we have done below. Keep in mind, your sales journey may look different depending on your unique strategy.
- Choose a business broker
- Determine your company’s worth
- Plan your sales strategy
- Market your company
- Negotiate a deal with a qualified buyer
- Complete the due diligence process
- Close the sale
- Assist with the transfer of ownership
Step 1: Choose a Business Broker
First and foremost, choose a broker you can trust. Check the reputation and schedule a consultation with any broker you consider. Ideally, you want to choose a broker who sees the whole value of your company, rather than simply looks at your financials alone.
Step 2: Determine Your Company’s Worth
Your broker should conduct a market-based business valuation. This determines the worth of your company based on past sales data, industry trends, and your company’s financial (and non-financial) information.
Step 3: Plan Your Sales Strategy
Your sales goals and business valuation may dictate your sales strategy to a large extent. For instance, you may decide to go to market right away if you receive a favorable value. In other cases, it may be best to wait to list your company while you improve your company’s value. You will also collect your company’s financial and legal documents and put together your sales memorandum during this stage.
Step 4: Market Your Company (via Your Business Broker)
Once the time is right, your broker will begin marketing your company to qualified buyers. This may involve the utilization of private databases, connections, contacts, and networks. Your broker may recommend the use of a blind listing that keeps the specific details of your company hidden and may have prospective buyers sign a non-disclosure agreement (NDA).
Step 5: Negotiate a Deal With a Qualified Buyer
Negotiations are a tricky part of a business sale. It is best to allow your broker to handle this process for you. They can look out for your best interest and ensure the discussions move toward a deal that is best for both sides.
Step 6: Complete The Due Diligence Process Efficiently
After a buyer signs a letter of intent (LOI), due diligence begins. This allows the buyer a chance to review your company documents, request more information, meet with business partners and/or key employees, and tour your facility.
Step 7: Close The Sale and Confirm The Payment
You are able to close the sale of your marine products manufacturing company once due diligence is complete. At the closing table, you can expect to review the purchase agreement (with your attorney), sign the agreement, and confirm the buyer has sent the payment.
Step 8: Assist With The Transition of Ownership (if Applicable)
Lastly, you will need to assist the buyer with the ownership transfer. Of course, this involves an update to all licenses, patents, insurance policies, etc. The full extent to which the seller is involved is based on the terms that were agreed upon during negotiations.
Sell With Confidence at Sigma Mergers and Acquisitions
Sigma mergers and Acquisitions can help you sell your marine products manufacturing company with confidence. Contact us today to learn more about the sales process and receive a free, no-obligation business valuation from an experienced broker.