Food manufacturer businesses include some very specific techniques and require a very specialized labor, as it deals with industrialized food, sometimes for a great number of different brands and multiple flavours.
It’s very important to have all the difficulties and processes steps in mind when you decide to sell your food company. Especially because they are usually larger businesses and, once they are not easy to run, they can’t be that easy to sell, can’t they?
So in cases like that, it’s highly recommended that you hire a professional business broker to help with all finance information and other details you’ll need before the sale.
But if you want to do it by yourself or you are at least curious and want to prepare all the papers, or even if you want to be aware on how are food manufacturer businesses right now, check the following topics:
What is your Food Manufacturer business worth?
In order to know exactly what your food company is worth, you need to gather all finance data from the pasts three to five years and compile it into finance reports. Potential buyers will probably ask you about your business gross income, so you better have all the information they need.
But they can also ask you about your business location, if there’s any competition and especially if the competition is affecting your business.
Follow these topics and make sure they are all well answered:
- 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 Food Manufacturer worth more?
But don’t set your asking price before taking some very important differentials into consideration. Which differentials? You tell me.
Is your business working online? Does it operates in other states? How specialized is your staff? Do you work with up-to-date equipments? All of that must be considered before you know how much you’ll ask from your food manufacturer.
In case you have any questions, check out these topics:
- 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 Food Manufacturer sell for?
When you take a look at the number of total sales, you will notice that food manufacturer businesses are not particularly popular in the United States, but if you look at the total transaction value for the past ten tears, you will also notice that it is very profitable at least.
There has been negotiated over $134 million in 174 sales. Average multiple is almost 3, which means asking price is usually almost three times bigger than total gross income, and average sales price is very high also: $778k.
What is the most frequent deal size?
Most frequent deal size is not that far from average sales price: $500k. It’s a little smaller because the number of sales in the past five years.
There has been more sales between $250k and $1 million than in other deal sizes, which is very good and must be taken into consideration. However it’s very likely you sell your business for less $250k if you don’t make the correct valuation.
Is the Food Manufacturer market getting bigger?
Not exactly. Things were better for food manufacturer market. In 2015 and 2014, total transaction value were much smaller than 2013 or 2011, for example.
Because of it, we don’t know what to expect from the next few years, as it also depends on the number of food companies that were sold, how big they are and for which price they were negotiated.
Are bigger businesses worth more?
Usually yes, although there are a few exceptions to this rule. Look at 2015 numbers for example: if a food company owner have sold his business for less than $250k he had a higher profit than the one who sold in the 250k-500k range of price.
But the higher the business the most valuable it must be, as more investments have been made and so on.
What states have the most business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California, Florida, New York or Texas you may get a lot more offers than if you are in Vermont or Minnesota. But 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 Food 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 food manufacturing industry it may likely be a person who already had a store in the field.
Food manufacturer market is not at its best moment right now, but good sales are still very likely, as average sales price is up to $700k and most frequent deal size is $500k.
Selling your business today may represents a great chance you have a good deal, but make sure you know how to value your food company before setting your asking price.
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.