How to Sell a Sanitary Service and Sanitary Product Manufacturing Company

How to Sell a Sanitary Service and Sanitary Product Manufacturing Company

Sanitary product manufacturing company owners are in a unique position. On one hand, there is rising demand for their products which has led to an increased number of investors looking to enter the industry (or acquire more within the industry). On the other hand, the U.S. has become a net importer of sanitary products. For many owners, this creates an opportunity to sell now, especially if they are nearing retirement or ready to start a new business venture. In this review, we take a close look at how you can value and sell your sanitary product manufacturing company. 

About The Sanitary Product Manufacturing Industry

As you might expect, sanitary product manufacturing companies have grown substantially since the pandemic. Not only did sales numbers spike during the COVID pandemic, but they continue to remain much higher than they did before as more people are valuing cleanliness. The industry is also powered by a growing number of individuals reaching the age of 65. However, some fear a decrease in the number of births causing a hindrance to growth.

 

Specifically, the sanctuary product manufacturing industry engages in the manufacturing of sanitary paper products, such as facial tissues, handkerchiefs, table napkins, toilet paper, towels, disposable diapers, sanitary napkins, and tampons (source: Business Reference Guide). Here are the most recent industry numbers and projections:

 

  • There are approximately 119 sanitary product manufacturing companies in the U.S. 
  • There was a 1.6% annual growth for the sanitary product manufacturing industry from 2018 to 2023
  • The sanitary product manufacturing industry generates $14.1 billion in annual revenue
  • The annual profit for the sanitary product manufacturing industry is $802.7 million
  • Experts predict a slight increase in annual growth (0.9%) from 2023 to 2028

How to Value a Sanitary Services Company

Types of companies can vary here from Trash Can sanitation to water sanitation.  The valuation process is one of the most crucial when you are selling a sanitary service company. Especially since some of these companies are new part of the industry.  Due to the limited number of sales with similar companies, along with the unique nature of each one, rule of thumb data (acquisition multiples) are less reliable for this industry. However, your financial performance and acquisition multiples still play a crucial role. 

Your growth potential, subsector, location, customer concentration, workforce quality, unique advantage (i.e. patents), and reason for selling may also play a role in how much you can expect potential buyers to offer to acquire your company. Your broker should take all of these factors (and more) under consideration when providing you with a professional valuation. 

About

Sanitary Services Company Industry

As you might expect, sanitary service companies have grown substantially since the pandemic. Not only did sales numbers spike during the COVID pandemic, but they continue to remain much higher than they did before as more people are valuing cleanliness. The industry is also powered by a growing number of individuals reaching the age of 65. However, some fear a decrease in the number of births causing a hindrance to growth.

Specifically, the sanctuary product manufacturing industry engages in the manufacturing of sanitary paper products, such as facial tissues, handkerchiefs, table napkins, toilet paper, towels, disposable diapers, sanitary napkins, and tampons (source: Business Reference Guide). Here are the most recent industry numbers and projections:

 

  • There was a 3.6% annual growth for the sanitary servicer industry from 2018 to 2023

How to Value a Sanitary Service Company

The valuation process is one of the most crucial when you are selling a sanitary company. Due to the low number of sales with similar companies, along with the unique nature of each one, rule of thumb data (acquisition multiples) are less reliable for this industry. However, your financial performance and acquisition multiples still play a crucial role. 

Your growth potential, subsector, location, customer concentration, workforce quality, unique advantage (i.e. patents), and reason for selling may also play a role in how much you can expect potential buyers to offer to acquire your company. Your broker should take all of these factors (and more) under consideration when providing you with a professional valuation. 

An 8-Stage Process for Selling Your Sanitary Company

You can sell your sanitary company by following the eight-stage process laid out below. Although this comprehensive guide covers most (if not all) steps involved with the sales process, it is important to remember that no two business sales are the same. For this reason, we recommend consulting with a business broker who can personalize your strategy.

 

  1. Valuation
  2. Planning
  3. Preparing
  4. Offers
  5. Negotiations
  6. Due diligence
  7. Closing
  8. Training

Stage One: Valuation

As discussed, your valuation provides you with a professional assessment of your company and a general idea of how much a fair and reasonable buyer is willing to pay. If you are happy with your value, then you can proceed to market right away. If you are not satisfied with your value, then you can take steps to improve your company’s worth before you seek a buyer. 

Stage Two: Planning

You will then need to plan your sale strategy. In doing so, you should establish what your initial asking price is and how much negotiation room you allow for yourself. You should also establish the hope you have for your company long-term s well as your long-term vision for yourself. 

Stage Three: Preparing

Next, you will prepare all that you will need for the sale. This is the last thing you should do before you seek a buyer. Notably, you should collect your legal, financial, and operational documents for your sanitary product manufacturing company. You should also prepare your non-disclosure agreement(s), confidential information memorandum (or another form of sales memo), and a video interview of yourself and a guided tour of your facilities. 

Stage Four: Offers

Your broker will handle the offers stage for you. This involves utilizing private marketing channels, such as databases and personal contacts and connections. Your broker may field offers from potential buyers within the sanitary product manufacturing space, screen the offers, and begin negotiations. 

Stage Five: Negotiations

Negotiations are often the hardest part of the sales process, particularly for owners who have an inexperienced business broker (or no broker at all). The fact is both sides may start far apart after the initial offers. Your broker should professionally negotiate a deal that is fair, reasonable, and with terms upon which you are willing to agree. After you secure a buyer, they will sign a letter of intent (LOI). 

Stage Six: Due Diligence

The LOI sets into motion due diligence. This is the stage in the sale when the buyer has the opportunity to conduct a deep investigation of your company. At this point, you trust them enough to maintain confidentiality, and you will need to provide them with your tax returns, internal financial statements, legal information, and operational procedures. They may also request a walk-through of your facilities and meetings with important members of your manufacturing team. 

Stage Seven: Closing

You can schedule a time and place to close the sale after due diligence. The buyer may place the payment in escrow ahead of time, which is released during closing. The primary purpose of the closing visit, however, is for both sides to review the purchase agreement final time and to attain the final signatures. You will also need to start the ownership transfer immediately upon closing the sale. The employees, suppliers, and customers, should be notified of the ownership change as well. 

Stage Eight: Training

Lastly, you will need to fulfill your training requirements, which should have been discussed prior to closing the sale. If the buyer has experience with sanitary product manufacturing, then they may not need much (if any) assistance. However, a less experienced buyer may need substantial training from the previous owner. 

Are You Ready to Sell Your Sanitary Product Manufacturing Company?

Sigma Mergers and Acquisitions can help you sell your sanitary product manufacturing company for fair market value. We are a full-service Dallas business broker and assist with all stages of the journey. From providing a valuation to helping you close the sale, we are there for you every step of the way. Contact us today and receive a free, no-obligation business valuation. Sigma Mergers & Acquisitions is the leading Mergers and Acquisitions, Business broker advisory firm in Dallas Texas specializing in facilitating strategic transactions for businesses across diverse industries. Our seasoned team of experts meticulously navigates clients through the intricate process of Business brokerage, mergers, acquisitions, and divestitures, ensuring seamless transitions and maximizing value. With a client-centric approach, we offer tailored solutions designed to meet the unique needs and objectives of each organization. Our comprehensive suite of services encompasses every aspect of the transaction lifecycle, from initial valuation and market analysis to due diligence, negotiation, and post-merger integration. Through a combination of extensive industry experience, market insights, and unparalleled dedication, Sigma Mergers & Acquisitions delivers exceptional results that drive growth and prosperity for our clients. Whether you are considering selling your business, seeking strategic acquisitions, or exploring other growth opportunities, trust Sigma Mergers & Acquisitions to be your trusted partner every step of the way. Contact us today to discover how we can help you unlock the full potential of your business and achieve your strategic objectives.

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Scot Cockroft Business Broker
Hi, I’m Scot Cockroft.

When I founded Sigma Mergers and Acquisitions back in 2003, I had sold my business the year prior.

Now, that can sound good, but let me tell you, back in 2003, it was not easy to sell a business. Not that I’m saying in modern day times it’s easy to sell a business, but back then I interviewed broker after broker after broker, and no one was interested in actually seeing the value that my business brought to the table.

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Sigma is a the leading business broker in with Corporate offices in Dallas/Fort Worth with roots from 1984. Over 600 businesses sold in Dallas, Fort Worth, Texas, Oklahoma and across the South. Sigma provides full business brokerage services with NO upfront fees. We provide Market approach business valuations for business sales. Sigma is passionate about helping business owners achieve their goal of financial security. Contact us today for a free no obligation business valuation. We are here to help you achieve your goals.

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