Selling Plastic Injection Molding Companies

South Bend is well known for plastics companies, mostly injection molding, but plastics also encompass rotational molding and extrusions.  This is a great time to capitalize on your business if you're looking to exit.  We specialize in selling manufacturing companies of all types, including metal stamping, steel fab, CNC machining, 3D printing and plastic companies.  

Plastics companies require a lot of equipment for presses and dies along with all of your other equipment.  Unfortunately, selling your business is based on your ability to monetize all your assets to create an income.   The best time to sell is when your revenue is stable or going up. 

We typically will look at a revenue-based valuation, income-based valuation, and market-based valuation.   If your margins are good and your operations are efficient, all 3 valuations should show similar results.   If your margins are low, or your overhead is too high, the revenue-based valuation will be higher than the other two.  We know we need to know more about your business than just the numbers and we'll want to know as much as possible.  

After completing the Business Valuation, we’ll provide you with your business’s estimated value. You may choose to list it for sale right away, or you might need to address certain weaknesses and improve profitability before selling in the next 2-3 years. We can offer guidance on what areas to focus on, and you can tackle them independently, or we can establish a review process and coach you through it. Often, business owners continue purchasing equipment primarily to reduce tax liabilities. However, if you plan to sell within three years, it's wise to invest only in equipment that delivers a strong return on investment. Instead, focus on maximizing profit and simply paying the necessary taxes.

Once you decide to move forward with listing your business, we’ll create a Confidential Information Memorandum (CIM) or Business Profile. We’ll send a teaser to our email database and highlight key attributes in online advertisements while keeping your business name and address confidential. Before sharing any details, we require interested parties to sign a non-disclosure agreement. If the inquiry comes from a competitor or customer, we’ll consult with you before disclosing any information.

The prospective buyer will want to meet you, with us of course, and see the business first hand.  We recommend a 3-way Google Meet video call as the first step to screen buyers.  If the interest continues, we'll set up a meeting, preferably after hours.  

The next step is to get an LOI to outline the price for the business, real estate (or lease), the inventory and the terms.  

The Buyer will want to make sure the business is what you say it is.  They'll want to see sales records, P&L reports, balance statements, tax returns, bank statements, vendor contracts, customer contracts, key employees and more. 

The Buyer will need to secure financing.  Traditionally, this would be with 10% cash down and an SBA loan for the balance.   With interest rates where they are, many buyers are trying to get commercial loans if there is significant collateral.  Commercial loans can be 2% less interest and can get funded faster.  

Once all the due diligence is done and the Buyer knows they can get financed, they'll submit an Asset Purchase Agreement and a Real Estate Contract (if they are buying the real estate).  These documents will go into much more detail on the transaction, including the assets included and excluded, the allocation of assets for tax purposes, bill of sale, consulting agreement, and a non-compete agreement. 

The day or two before the Closing, you'll want to take an inventory of all unused, full length raw materials and all inventory that is in process in your shop for a customer order.   You'll need to agree to proration of completion on the WIP.  All of the raw materials are valued at cost.  

By the time we get to Closing, you should have everything completed ahead of time, so the only thing you're signing at Closing is the Bill of Sale.  If real estate is involved, you'll need to close at a Title Company.   If there is no real estate involved, Closings can happen at the Buyer's bank, attorney's office, or the company conference room.  Payment should be made by electronic transfer of funds.  

Part of the process now is to successfully transfer the business from you to the buyer.  We recommend telling the employees after Closing.  The Buyer should have his insurance and bank accounts set up in advance.  Credit card processing accounts need to be established.  Any vehicles in the purchase need to be re-titled at the BMV.   You'll want to introduce the Buyer to your customers.  Set up new CRM databases if necessary or Quickbooks.   You'll still own your entity and will be responsible for taxes, including personal property taxes, for the next cycle.