101 Questions You Must Ask Before Buying a Manufacturing Company
101 Questions You Must Ask Before Buying a Manufacturing Company
Author: Mark Mroczkowski
As an M & A professional selling within the manufacturing sectors, I’ve compiled a list of questions every buyer should ask before acquiring a manufacturing company.
On The Company History
How and why did the company start?
What were the major milestones?
How much has it grown from inception until now?
Who are the shareholders?
Are they all on board with the sale?
On Strategy & Market Potential
What are the key risks to this business?
What are the major impediments to corporate growth?
Are you aware of any new technology that will disrupt the industry?
What markets exist for your products and services that you’re not going after?
What is the one strategy that, if implemented, would be a game changer for the company?
What are the best opportunities for growth?
When was the last time you increased prices?
Do you feel there is room in your current pricing for an increase without losing customers?
On Your Competition
Who are your three main competitors?
How do you differentiate yourself from them?
What is the most common reason you lose an order to a competitor?
Thinking of your closest competitor in size, what do they do better than you?
Who are the most dominant industry players? What are their strengths and weaknesses?
How can you better position yourself against the competition?
On Marketing
Describe any company marketing and advertising campaigns.
What is your annual marketing budget?
What trade associations do you belong to?
What is your level of participation in your trade associations?
Do you market to existing customers to obtain more work?
When was your website last updated?
Do you utilize social media? What venues?
Do you promote your business through Google AdWords?
Who handles social media for your company?
On Sales
Describe the typical sales process from order to delivery and installation.
Describe who on staff is dealing with the customer at every stage of the sale cycle.
Describe how a quote is generated.
Is your quoting system computerized?
How far back in history do you have quoting records?
Is there a minimum profit margin added to quotes?
Do you have a standard shop rate? What is it?
Do you track the actual time of a project in comparison to the time quoted?
Do you have an inside sales force?
Do you have outside sales reps?
How is the sales force compensated?
How critical is the owner to the sales process?
Who besides the owner are the customers accustomed to speaking with?
On Operations
What industry certifications does the company hold?
Are there other certifications that, if obtained, would help the company grow?
What are the main production bottlenecks right now? What is the cost to remedy?
Any known or suspected deferred maintenance?
As to equipment, if money were no object, I’d do _____. Why?
How many shifts do you currently run, and what hours?
What is the remaining % capacity of the existing shifts?
What is the remaining % capacity of the current building and staff?
What would have to change to double sales?
Describe safety programs and training.
Human Resources
Do you use a professional payroll service? Who interacts with the payroll company?
Are there any union contracts? Any suspected union organizing activity?
Are there any employees ready to retire in the next few years?
Do you have a plant manager? Describe their level of
Describe any training programs in the last three
Describe all employee benefits.
Do you have a bonus or profit-sharing program?
Do employees receive annual raises?
Are any employees receiving an above market pay rate?
Facility
Do you own or rent?
If owned, do you prefer to lease or sell, and under what terms?
What are you paying if you rent, and when does the current lease expire?
Are there renewal options?
Describe the relationship with the landlord.
Any known or deferred maintenance?
Describe the top 5 facility needs.
Information Technology (IT)
What software systems are currently used in the business?
What are the top 5 tech needs for the company?
What software, if installed, would be most helpful to the business?
Does your current staff welcome technology improvements and changes?
Suppliers
Describe your supplier sourcing procedures. Who performs this function?
Are there any sole suppliers of products or services?
Are there any quality or dependability issues with suppliers?
What are your supplier payment terms?
Financial
What accounting software does the company use?
When was the software last updated?
What are your payment terms with customers?
Do you offer a discount for early payment? How many, if any, take advantage of the discount?
What is your average A/R aging?
How much bad debt have you written off in the last five years?
How much capital is needed to run the company for 30 days?
What is your average A/P aging?
Are you on COD with any of your suppliers?
How much of your income comes from your top customer?
How much of your income comes from your top 10 customers?
How much of your income comes from the top industry served?
Legal
Have there been any lawsuits in the last three years?
Any workplace accidents in the last three years?
Any EEOC issues in the last three years?
Are there any OSHA issues in the last three years?
What warranties does your company provide on its products?
Are there any warranty claims in the last three years?
Are there any known or suspected legal, regulatory, or government issues?
Personal
Why do you want to sell the company?
How long will you remain for training and transition?
Would you consider a consulting arrangement on an as-needed basis after the transition?
Will you be moving away from the area?
If you were younger and money was not an obstacle, how would you grow this business?
What do you most want to see in a buyer?
What are your primary concerns about the sale of the company?
Mergers & Acquisitions Process Overview
