Machining is the process of removing unwanted material from the block of metal to get the desired shape. In fact, machining doesn’t involve metal necessarily, but every raw material which needs a different shape.
There are a lot of businesses like that in the United States, and it can be very profitable too if you know exactly how to run it. But the truth is: it’s not an easy task to do it.
A fabrication and machining business needs a very high investment to be started and a very efficient staff and infrastructure.
If you own a fabrication and machining business and want to sell it, however, you first need to know how to value and sell for the best price. Look at the following topics.
What is your Fabrication business worth?
In order to know exactly what is your business worth, the very first thing you have to do is gather all finance information you can find and compile it into a financial report. Then, provide potential buyers with these information.
It seems confused, but it’s actually not. Take a look at these metrics:
- 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?
What makes a Fabrication business worth more?
There are a few aspects that also must be taken into account before you set your asking price. If you have developed some partnerships, diversified your products fabrication according to demand, stayed always opened to new technologies and also invested in their use it’s very likely you will have better offers from potential buyers.
If you still have any questions, follow these metrics:
- 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
What does the average Fabrication business sell for?
Looking at the chart, you’ll notice that fabrication and machining businesses are quite popular in the United States. There have been more than 500 sales in the past ten years, with a total transaction value of almost $900 million — a really huge amount of money.
Average multiple is 3.47, which means average asking price is more than three times bigger than average gross income.
What is the most frequent deal size?
Most frequent deal size is $600.000, much less than average sale price. However, if you take a look at the chart, you’ll see that in 2015, there have been the same number of sales less than $250k and also between $500k and $1 million.
The million dollar deals are also very high among fabrication and machining business. At least 12 between $1 million and $2 million and 10 between $2 million and $10 million.
Is the Fabrication market getting bigger?
Fabrication and machining business is living a great moment in the United States, but 2015 wasn’t the best year ever. This record belongs to 2013, when total transaction value was $145 million.
Last year, it was more than $75 million, almost half of 2013’s numbers. However, it’s possible to say that the moment is favorable for new sales.
Are bigger businesses worth more?
On average, that’s what happens. In 2015, for example, sales less than $250k had a 2.41 multiple, while $250-500k had 3.92 and $500k-1 million, 3.21, a little bit smaller.
The same happened in 2014, but $500k-1 million multiple was higher than $1-2 million.
What states have the most business deals?
California, Arizona, Florida, Illinois, Ohio, Pennsylvania and Texas are the best states to sell a fabrication and machining business.
However, Wisconsin, Washington, Oregon, New York, North Carolina, Minnesota, Massachusetts, Indiana, Georgia and Connecticut are also hotspots for sellings.
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 Fabrication and Machining, 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 fabrication and machining industry it may likely be a person who already had a firm in the field.
There have been more than 500 fabrication and machining businesses sales in the past 10 years, and total transaction value in this period was almost $900 million. Although is not the best moment (2013 was much better), it’s still a great time for selling your business.
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!