Electronics manufacturers, also known as Electronic Manufacturing Services, are the typical kind of business which is not easy to run.
Electronic manufacturers owners and their staff are responsible for testing, manufacturing, distribution, repair services for electronics components and so on.
Therefore, it is a typically large businesses, as it deals with huge amounts of money and a multiple variety of services. As it can be difficult to administrate a electronic manufacturer, on the other hand you can profit at lot from it if you decide to sell it.
However, if you don’t know exactly how to take the best offer from a business sale, it’s time for you to read this article and solve any questions you might have.
What is your Electronics Manufacturer worth?
The very first thing you need to do is find out what your electronic manufacturer business is worth. But how? Take a look at these following topics:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
Write it down: you should gather all finance information you can in order to provide potential buyers with numbers that justify the price you are about to ask. Then, explain them how competition works in your state. The business location is a very important factor to take into consideration, so you better have this information on hand when they ask.
What makes an Electronics business worth more?
But before setting your asking price, you can’t take only the topics above into account. There are other factors that can contribute even more for your business valuation, such as:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
In the electronic manufacturers case itself, a very strong differential is where your business is working right now, in a physical store or also online and if you take clients from other states too.
Make sure you tell potential buyers everything that can improve your business value in order to take the most profit from it.
What does the average Electronics business sell for?
There has been 127 electronics manufacturers sales over the past 10 years. It’s not a very big number, but take a look at the total transaction value for this same period: more than $190 million.
It means take usually electronic manufacturers owners are selling their businesses for a very good price, especially if you take into account that average sales price is up to $1,6 million and average multiple is higher than 2.5.
What is the most frequent deal size?
However, most frequent deal size is quite smaller: $400.000. Why does it happen?
At least in the last five years, most of sales were closed between $500k and $1m, which does not mean that you’ll probably sell your business for the same price.
There has been sales less than $250k, but there have also been millionaire sales, from $2 million up to $10 million.
Is the Electronics Manufacturer market getting bigger?
There was only one year better than 2015, when total transaction value was more than $20 million. In 2008, however, it was more than $80 million. It doesn’t mean that electronic manufacturer market is getting smaller, actually it’s quite the opposite.
We expect a good number from 2016, maybe even better than 2015’s.
Are bigger businesses worth more?
Usually yes, despite few exceptions. In 2015, for example, businesses sold for $250-500k had an average multiple of 3.08, while $500k-1 million and $1-2 million deal sizes had smaller average multiples: 2.99 both of them.
But when it comes to $2-10 million deal size, multiple was 5.77, the biggest one by far.
What states have the most Electronics business deals?
California, Texas, Ohio and Florida are the best states to sell your electronic manufacturer business for the best price, but it doesn’t mean you can make a good deal somewhere else.
sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Electronics Manufacturer, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the electronics manufacturer industry it may likely be a person who already had a store in the field.
Electronic manufacturing business is going well and it’s expected to be improved in the next few years, putting the past ten years into account.
And we can conclude that the larger the business, the higher you will your profit once you decide to sell it. Make sure you have the best offer before closing the deal.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts.