How to Sell a Structural Metal Product Manufacturing Company

How to Sell a Structural Metal Product Manufacturing Company

Structural metal product manufacturing company owners are in a good position as valuations remain relatively high. If you are an owner of a manufacturing company who is contemplating (or deciding on) their exit strategy and selling their company, then this guide is for you. Specifically, we discuss how you can determine the value of your structural metal product manufacturing company and sell it for fair market value or greater. 

About The Structural Metal Product Manufacturing Industry

Structural metal products play an integral role in numerous industries. For instance, the are critical for metal frameworks and parts used for construction purposes. A structural metal product manufacturing company produces goods fabricated structural metal, a highly technical task that requires a fair amount of training. 

 

Due to this, there is a relatively high barrier to entry, which provides stability for established companies. Industry profit has remained consistent and should continue to remain strong throughout the next five years. This bodes well for owners of structural metal product manufacturing companies as there is excellent demand. Here are the most recent industry numbers and projections: 

 

  • There are approximately 6,090 structural metal product manufacturing companies in the U.S. 
  • There was a 0.4% annual growth for the structural metal product manufacturing industry from 2018 to 2023
  • The structural metal product manufacturing industry generates $68.1 billion in annual revenue
  • The annual profit for the structural metal product manufacturing industry is $3.3 billion
  • Experts predict a slight increase in annual growth (0.9%) from 2023 to 2028

How Do I Determine The Worth of My Structural Product Manufacturing Company?

You can determine the worth of your company by receiving a professional valuation from an experienced business broker. They will most likely use a market-based approach. With this valuation method, the broker determines your discretionary earnings (SDE) and other financial metrics(i.e. EBITDA, net sales, gross profit, etc.). This is then applied to the following rule of thumb data for your industry: 

 

 

Of course, non-financial considerations are also applied in the form of adjustments. This could be related to growth potential, workforce quality, customer concentration, and your reason for selling (among other considerations).Your value may be higher or lower than the rule of thumb data suggests based on the specifics of your structural metal product manufacturing company. 

How Can I Sell My Structural Metal Product Manufacturing Company? 

Selling a metal product manufacturing company involves more than simply finding a buyer and having them pay you for it. Instead, you will need to properly value your company, prepare your legal and financial documents and information, seek offers in a confidential manner, negotiate a deal, allow for due diligence, and ultimately close the sale. Below is a more detailed description of each of these five stages: 

  1. The valuation stage
  2. The preparation stage
  3. The offers stage
  4. The due diligence stage
  5. The closing stage

The Valuation Stage

As discussed, a market-based valuation is the first step to selling your structural metal product manufacturing company. You can plan your sales strategy accordingly. For example, there may be simple ways to improve your company’s value, such as by organizing your bookkeeping and improving business operations. If you are happy with your value, then you can feel comfortable moving forward with the sale as soon as possible. 

The Preparation Stage

You will then need to prepare your company documents. This will save you time later in the process, especially during the due diligence stage when the buyer requests certain information to verify the details and performance of your company. Here is an overview of some of the documents you may need to collect during the preparation stage:

 

  • Financial documents – This can include tax returns, profit and loss (P&L) statements, cash flow statements, and balance sheets
  • Legal documents – Patents, trademarks, copyrights, lawsuit history, and business licenses
  • Operational documents – Asset lists, lists of equipment, employee lists, supplier lists, and customer lists

 

You should also establish your plan after you sell your company. For example, do you plan to retire or are you interested in other business ventures? Also, what is your vision for the company? This may influence the buyer you ultimately choose. 

The Offer Stage

Your business broker should protect the confidentiality of the sale. This is most important during the offers stage. To protect the privacy of the sale, your business broker must utilize a NDA “non-disclosure agreement” and “confidential information memorandums” (CIMs) that protect your most privileged information.

 

The broker may utilize private databases, connections, contacts, and networks to leverage offers. They will also screen the offers and filter out buyers who are not in a position to realistically purchase your company. For example, if they have no experience within the metal product manufacturing company and need heavy involvement from you to take over business operations, then they may be filtered out if you prefer not to be active in the training process.

 

Your broker will also negotiate on your behalf and facilitate a deal that meets your terms (both non-financial and financial terms). Once a deal is in place, the buyer will sign a letter of intent (LOI) that establishes their intention to purchase your manufacturing company at the purchase price agreed upon. 

The Due Diligence Stage

Due diligence is an opportunity for the buyer to review your company’s information. Their goal is to verify that what you presented during offers and negotiations is accurate and consistent. Specifically, the buyer may request the following during due diligence:

 

  • Company documents, such as those that you gathered in the preparation stage
  • A visit to your structural metal product manufacturing facilities, warehouses, offices, etc.
  • A meeting with yourself and other top members of the company
  • A meeting with the top customer (if they make up a large portion of your sales) 
  • Answers to a multitude of questions that allow them to gather more information

 

Your business broker should guide the due diligence process. Although the buyer should have every opportunity to review your company so that they feel comfortable and prepared moving forward with closing, it should be entirely open-ended to the point where it takes multiple months. Your broker should ensure the process moves along quickly. 

The Closing Stage

The closing meeting can be scheduled as soon as due diligence is complete. This could take place in person, although in most cases post Covid  a virtual closing is the most common. Much of the details have been ironed out by this point, and the buyer may have already placed the payment into escrow. Both parties will review and sign the purchase agreement during closing. 

Afterward, the escrow agent releases the funds. The seller then must update the company ownership information, provide the buyer with access to all facilities, equipment, etc., and notify employees, suppliers, and customers about the change in ownership. Of course, you may also have to be involved with training the new ownership after the scale is complete. It may help to prepare your staff for this before you officially sell. Ideally, you should have a minimum role in daily operations, aside from overseeing and managing the staff. 

Receive a Free, No-Obligation Business Valuation From a Dallas Business Broker

We help structural metal product manufacturing company owners sell their company in a stress-free manner. If you are planning your exit strategy, then contact us today. We are glad to answer your questions and provide you with a free business valuation that determines how much you can expect your company to be worth on the market. 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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