There is a mass exodus of manufacturing from China by US companies. Much of that work is being transitioned to the US. This means that this is the perfect time to sell your manufacturing business.
Here are some reasons:
- Lenders prefer manufacturing transactions. Manufacturing is often favored by lenders due to its asset composition including three classes of inventory (raw, work-in-process, and finished goods), capital manufacturing assets, and often real estate all of which can collateralize loans.
- These high-quality assets serving as collateral for a loan increase the attractiveness of the acquisition to lenders. In addition, manufacturing companies often generate steady positive working capital which enhances the ability to obtain acquisition financing. It’s for this reason that SBA solutions are commonly used in manufacturing acquisitions. Most of such acquisitions are asset deals with SBA7 (a) and 504 financings.
- A potential buyer doesn’t necessarily need manufacturing experience Buyers with relevant manufacturing experience who understand the processes, markets, and materials utilized are obvious candidates for a manufacturing company acquisition. However, smart general managers especially those with a process-based business model experience, including private equity groups, do succeed. Since there’s a lot of new manufacturing business coming into the market, it’s important to note that individuals targeting manufacturing acquisitions often will be competing with larger strategic buyers or private equity groups seeking “bolt-on” acquisitions. In these cases, the winning bid typically comes down to cash.
Those are some of the reasons that companies are moving manufacturing from China to North America. Take advantage of this shift and sell your manufacturing business today. We’re here to help you through the sales process. Contact us today.