Improvement Opportunities In Manufacturing Targets
While none of these should preclude an acquisition, we’ve come to witness several variables that suggest that an acquired company may need extra help. These include: Are the finance employees familiar with using your preferred (or an analogous) ERP system, or will they be learning to use a sophisticated system anew? Will the target be […]
Margin Expansion Through Better Supply Chain Management
As your customers seek to expand their margins through better supply chain management, it’s not uncommon for the converter – whether an aerospace machining company, an injection molder, or a food processor – to get squeezed. The financial impact can be significant. Take the following example: OEM CUSTOMER negotiates with raw material SUPPLIER to secure […]
Be Very Careful With OEE and Utilization Metrics
When evaluating a manufacturing company, it’s easy to lean on metrics tied to machine utilization because they reveal both available capacity and whether a plant might be overstaffed. Be very careful! OEE, utilization and similar metrics are sometimes deceiving. They should measure how many hours in the day a machine is in production generating sales […]
How Can You Acquire Sustainable Margins in Contract Manufacturing?
Margin erosion is all too common in contract manufacturing and comes from many sources outside of your control, including: labor costs, utility costs, and material costs. We’ve seen some crazy examples – particularly when raw material markets get out of control – and the financial consequences of a fixed price contract when your inputs are […]
Creating a Platform At Lower Purchase Multiples
We’ve consulted with hundreds of financial sponsors and very few are interested in buying businesses on a standalone basis that have less than $5 million in EBITDA to start a platform. And we have personal relationships with hundreds of lower middle market manufacturing companies that fall below that earnings threshold. The solution? If you have […]
Understanding And Preparing For The Due Diligence Process
The acquisition process is tedious. Buyers will want every piece of information they can gather regarding your business, and yet you still have to run your business and want to make sure you don’t create stress among your employees by revealing the possibility of a sale and creating uncertainty. The best thing you can do […]
Tips To Execute A Successful Industrial Roll-Up
Acquiring several companies in the same or complementary industries is easier than making them work together harmoniously to create a business capable of achieving above-market organic growth. We’ve identified a host of better and best practices that we believe will deliver your greatest chance at success. These include: Hire (or at least identify) your platform […]