Two clients in the machining business. One is going up for auction soon. The other hopes to sell for $10M. Both are family businesses run by brothers. One runs mostly National Acmes, the other Davenports, Wickmans, and Brown & Sharpes.
One has well-trained operators, the other says they are quitting the business because they can’t get an operator nor setup man.
The one that is auctioning off their machines did mostly military and medical, the successful shop is almost all automotive.
I do not know all of the intricacies of these two firms by any means, but I have been involved with selling many businesses, some of which have been successfully sold and others where the owners were forced to liquidate.
What have I learned from my foray into selling and buying businesses?
First, there is no secret sauce, but businesses have value and often it is not directly related to the company’s physical assets they have to sell, which is usually why they call folks at Graff-Pinkert in the first place. Companies like us understand that the real value is not in 10-year-old Haas mills and 30-year-old 1-1/4″ National Acmes. The trick is to find the party able to step in, run the business, and make at least as much money as the current owner and preferably more. What they are usually paying for is the skill and the motivation of the current workforce and access to the company’s long-term customers.