How to Sell a Window and Door Manufacturing Company

How to Sell a Window and Door Manufacturing Company

Window and door manufacturing companies are often selling for between three and five times their seller’s discretionary earnings (SDE). In this review, we take a close look at the valuation and sales process for window and door manufacturing companies. 

About The Window and Door Manufacturing Industry

According to Business Reference Guide, the window and door manufacturing industry primarily engages in the production of metal framed windows (i.e., typically using purchased glass) and metal doors, sheet metal work, and ornamental and architectural metal products. Steel and aluminum price volatility has contributed to a recent decline in profitability. However, the industry in the United States still remains strong with excellent growth projections. Here are the most recent industry numbers and projections:

 

  • There are approximately 14,223 window and door manufacturing companies in the U.S. 
  • There was a 1.4% annual growth for the window and door manufacturing industry from 2018 to 2023
  • The window and door manufacturing industry generates $53.1 billion in annual revenue
  • The annual profit for the window and door manufacturing industry is $2.2 billion
  • Experts predict a slight increase in annual growth (0.3%) from 2023 to 2028

How to Value a Window and Door Manufacturing Company

You will use a market approach (most likely) when you sell your window and door manufacturing. If you have significant value in your assets, then an asset approach may be used as well. However, with a market approach, your broker will consider how much a fair and reasonable buyer is willing to pay. This is determined by multiplying your EBITDA, SDE, and/or net sales by the following rule of thumb data: 

 

  • Window and door manufacturing companies sold between 2.21 and 3.23 times the Seller’s Discretionary Earnings (SDE)
  • Window and door manufacturing companies sold between 2.78 and 6.49 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
  • Window and door manufacturing companies sold between 0.61 and 1.87 times the annual net sales

 

How to Sell a Window and Door Manufacturing Company

It helps to break the sales process down into different stages. Below we discuss a process for selling a window and door manufacturing company. Although, we recommend a personalized policy from a qualified and experienced business broker.

 

  1. Plan
  2. Market
  3. Due diligence
  4. Close

#1: Plan

There are a number of preparations and planning steps you will need to make before you officially seek a buyer for your window and door manufacturing company. Notably, you will need to collect the following documents:

 

  • Financial documents (i.e. tax returns, profit and loss statements, cash flow statements, and balance sheets)
  • Legal documents (i.e. lawsuit history, business license(s), patents, trademarks, copyrights, insurance policies)
  • Operational documents (i.e. employee lists, asset lists, machinery and equipment lists, operating procedures, PTO, sick, and vacation policies)

 

Your business broker will use your financial information to formulate a realistic and objective business valuation using the market approach. This information will help you plan your exit strategy and decide when you should list your company for sale (and for what price). 

#2: Market

Next, you will need to market your company for sale. However, this is much different than marketing a product, service, or even a home or commercial property. When you are selling your window and door manufacturing company, you must sell in a confidential manner. This prevents leaks to the public, which could jeopardize your valuation by compromising your business operations. For example, if employees leave your company out of fear of an ownership change and one of your top clients switches to one of your competitors, this could severely impact the offers you receive.

 

Therefore, your business broker should understand how to ensure your company is sold in a private manner. They may leverage private databases, connections, contacts, and networks. They should also use non-disclosure agreements and confidential information memorandums (for the sales memo) to help avoid information leaks. Ultimately, your broker will negotiate with qualified buyers until you are satisfied with an offer. You can secure the deal with a signed letter of intent (LOI)

#3: Due diligence

Due diligence is an opportunity for the buyer to review the details of your company and ensure they are comfortable moving forward with the purchase agreement (PA). Notably, during due diligence, you (the seller) can expect the following to occur:

 

  • The buyer requests legal, financial, and operational documents from your window and door manufacturing company
  • The buyer requests an in-person walk-through of your manufacturing sites, warehouses, facilities, etc.
  • The buyer meets with you on a weekly basis (via cadence calls) to discuss the due diligence process and progress
  • The buyer may request meetings with certain employees, suppliers, and/or customers if they feel their commitment is vital to the company’s future

 

Your business broker should be there to guide the process and ensure all stages of due diligence move along quickly. Otherwise, you could see a prolonged due diligence period, and each passing day represents a new opportunity for the buyer to find some unforeseen reason to back out of the deal. 

#4: Close

Lastly, you can close the sale after due diligence is complete. This should entail drafting the purchase agreement (with the assistance of your business broker, attorney, and CPA), ensuring the buyer is ready and able to complete the payment, and preparing the information you need to complete the sale transfer. The buyer may place the payment for the company in escrow prior to the closing meeting. This allows for a more shameless release of funds. Of course, if you are seller financing, then the buyer may only place the down payment into escrow. 

 

Lastly, you will need to transfer ownership of the company. This may involve updating business licenses, insurance policies, utilities, and more. You will also need to notify employees, suppliers, and customers that the sale is complete. Lastly, you will need to fulfill your obligations as it pertains to seller training. 

Sell Your Business With Confidence With Sigma Mergers and Acquisitions

The first step to selling your window and door manufacturing company is a market-based business valuation. You can contact us today if you have questions about selling your company and are ready for a free 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.

 

CATEGORIES
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.

SHARE
Facebook
Twitter
Telegram
LinkedIn

Ready to get started?

Ready to Get Started?

Footer

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.

Our Address

(214) 214-9400
Info@sigmamergers.com
Corporate Headquarters in Dallas

Quick Links