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Manufacturing Business Back to our services

Manufacturing Business

The manufacturing sector is a large and diverse segment of the economy, with a large variety of industry types.  Some of the major classifications are:-

  • Food related
  • Automotive
  • Building/construction
  • Printing 
  • Agricultural 
  • Clothing and Footwear  
  • Leisure Industries 
  • Medical related


Typical buyers are:

  • Attracted from a wide range of backgrounds, quite often from senior management levels.
  • Large business with established brands and product lines are in demand by other businesses

What is a typical manufacturing business worth?

Note:  The information provided is general in nature and is presented as a guide only every business has its own unique qualities.  It does not take into account the specific characteristics of a particular business and the market conditions that exist at the time of transaction.

Characteristics:

Specific industry sectors can have their own valuation drivers. Ownership of an established brand will have distinct impact on the level of goodwill of the business  

  • Uniqueness of the products
  • Protection through patents and designs
  • Level of technical expertise
  • Predictable level of demand for the products
  • Degree of difficulty for overseas manufacturers to enter the market  
  • A business that manufacturers products to customers specifications
  • Extent of automation in the manufacturing process reducing reliance on employing staff  
  • Source of new business

There are a myriad of factors to take into account when considering the value of a manufacturing business, they are influenced by and very dependent upon the specific industry the business operates in as each industry sector has it’s perceived desirability.  Other factors will include:-the length the business has been established, is the industry in a sunrise or sunset phase, what threat does technology hold for the future of the industry.  Other issues will be the amount of working capital required, number of staff employed, technical expertise required etc etc,

Most manufacturing businesses have substantial tangible assets such as plant and equipment, raw material, work in progress, finished goods etc to be considered when determining the value of the business.  Dependent upon the quantum value of these tangible assets within the overall value of the business there may be little or no goodwill.

Larger businesses with established brands, supplier/client relationships, skilled employees, availability of supervisor/managers can be very attractive in the marketplace as they can:

  • Be operated under semi/full management
  • Have a more predictable revenue and profit margin

For smaller and micro manufacturing businesses, their valuation can often be little more or sometimes even less than less than 12 months of earnings to a “working owner”.  This is often because ‘the owner’ is the business.

 
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