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Looking for advise. I have owned and operated a architectural casework and millwork shop since 1981. We have had a long run at it and it has served me well for many years. I would like to get out of the business and possibly try my hands at something else ( no idea what ). My son, that i have been grooming for the last 7 years decided he didn't want to take over and has since moved on to other fields. We have a small crew of 8, all great and talented guys. Our 10k shop is a complete CNC operation and has no debt,over 600k invested. In a perfect world i would like someone to buy me out, come in and take over, i could work with them for as long as it took for the transition. Value would be based on current equipment appraisal. Second option would be a sale of the equipment and assets at auction. we have about 500k on the books ready for production and more is coming in. My question is, Does anyone have any advise or ideas for me to make this happen.
How is your company set up? Sole proprietor? How critical are you to the company? Asking because if you are so critical to the company that it can't function without you, you are the company. The biggest financial aspect of the company is then you, and your machinery has the least value. Used machinery at auction will knock your socks off with the low prices it will bring.
I can speak to this as someone who bought an existing company - a little smaller than yours but very similar otherwise. Finding someone who could come in and buy you out turnkey I think is a rare find. They would have to have the right skill set, money, and be at some weird place in their career where there exists an incentive to take a major risk in dropping whatever they are doing and buying your company.
If I were in your position, I would explore finding another similar shop nearby with an owner who is younger and looking to expand. Maybe a shop that is a little smaller than you are and missing some of the equipment that you currently have. They could buy you out and transition their existing client base to your operation and double their size.
Rich and Ted hit right on the spot. My old man used to say:
Do you have anyone on staff with business savy? If you have another talented person that you can groom to take over, and are willing to owner finance, that may work.
My Company runs without to much involvement from me. We are a corporation, sub chapter s. Finding another shop to take over may be a good route. thanks for the idea.
I bought out a 21 year old company 14 years ago. My corporate life took a sharp turn and I was looking to buy a job in my hobby of choice. Good thing I had a strong business background. The owners stayed for a while but kept the clients thinking they still owned the business. I got rid of them and we survived and are doing well now.
My advice is to find another company interested in your equipment and client base or get a good business broker that can find someone like me willing to buy you out. Not an easy transition but it can work. Now that I have done that successfully it will be an easier sell. Good luck.
I know of two woodworking businesses that went through this transition in the past 5 years. One closed and sold the equipment and the other was purchased.
I was very surprised at the successful results of the business that just closed and liquidated. It was a 20+ man operation and the equipment was sold off at an online auction. I don't know the numbers of course but do know the owner was very satisfied with the results.
The other business was sold through a broker. There are a number of online "business for sale" websites that are known to the brokerage industry and found by people looking to buy. I believe that was how the buyer of this business was found. The owner of this business was also satisfied with the results.
I am curious how much a cabinet shop may be worth in terms of yearly gross income. 100%, 50%, more, less??
Our business broker used 2.5 times gross profit plus assets less liabilities. Shop was doing $200000+ a year and price was $500000.
Your numbers make it appear as though the shop you purchased had neither assets nor liabilities. Did I misunderstand the valuation method, or did they cancel each other out?
What about talking to your employees about buying you out?
You say they can run it without much involvement from you, so they should realize that can do it. There must be a way to structure a buyout if they collectively cannot come up with cash.
Tony- they were pretty close in that they were priced at $550000 but the real value of 20 year old simple equipment was too high so we cut that in half for a wash. Bottom line is that these businesses are really worth auction value unless you can convince a buyer that they can continue the same profit lines or grow. Hard thing to do with a single owner/founder business.