The plastic manufacturing serves a range of industries, such as packaging, construction, electronics, transportation and so on.
It’s a crucial business in the United States and, because of that, there are different possible methods of manufacturing plastic: injection molding, extrusion molding, blow molding, rotational molding are the most common ones.
So when people say that is not easy to run a plastic manufacturing business, it’s not a lie. And when it comes to selling it, a multitude of factors must be taken into consideration before you set your asking price or close a deal.
The next topics will show you how to value your business and how to sell it for the best price.
What is your Plastic Manufacturing business worth?
First, a plastic manufacturing business owner must do what every business owner usually does when they decide to sell their companies: Gather all finance information from the past three to five years and compile it into a big finance report.
Make sure you have all the following metrics covered:
- 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 Plastic business worth more?
Use of technology, highly skilled labour, up-to-date equipments and machines, diversified sources of income and web presence are some important factors that can make your plastics manufacturing business worth more.
Of course that’s not all. Take a look at these metrics in case you have any questions on what to be considered before setting your asking price.
- 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 Plastic business sell for?
Since 2005, when our research began, there have been 144 plastic manufacturing businesses sold in the United States.
Despite that it’s not a very large number, the average sales price and average multiple rates at least tells us that it is a very profitable business. Whoever wants to sell a business in this particularly industry may get a deal around $1.5 million and a profit four times and a half higher than its total gross income, once it’s 4.53.
What is the most frequent deal size?
Most frequent deal size when it comes to selling a plastic manufacturing business is $350k, much less than average sales price.
It happens because most of sales in the past ten years were less than $1 million, as you can see in the chart.
Is the Plastic Manufacturing market getting bigger?
Since 2011, there have been a decrease in the plastic manufacturing market and in the last year it reached the lower level in years.
So, even though there’s no particular reason for it, there’s no way to ensure that 2016 is going to be a better year. Actually, experts predict that is going to be even worse, but it is too soon to say.
It depends a lot on how many businesses are sold and for which value.
Are bigger businesses worth more?
Yes. The bigger the business, the higher the profit.
As you can see by looking at the chart, in 2015, businesses sold for less than $250k had a multiple of 2.59, while $500k-$1 million deal size had a multiple of 3.55 and $2-10 million, 5.95. It happened the same in the previous years.
What states have the most Plastic business deals?
California, Florida and Texas are the best states for selling a plastic manufacturing business, 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 Plastic 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 Plastic 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 Plastic Manufacturing, 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 plastic manufacturing industry it may likely be a person who already had a store in the field.
There has 144 plastic manufacturing business sale since 2005, and in the past five years there has also been a decrease in total transaction value. It’s not possible to ensure that 2016 is going to be better or worse than 2015, but at least we know that this particular industry is very profitable, with an average multiple rate higher than 4 and average sales price almost at $1.5 million.
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!