Author Topic: How to sell a machine shop?  (Read 858 times)

Financial.Velociraptor

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How to sell a machine shop?
« on: January 11, 2020, 01:03:32 PM »
My elderly Uncle has come down with cancer and wants to sell his machine shop business.  He makes machines that make HVAC ducting among other things.  He has a UL for that machine.  He also does some stainless steel work, miscellaneous fabrication, and CNC turret lathe custom work, plus he has a good welder on staff that does some custom work.  Business has three current employees but is under utilized with my Uncle unavailable to drive sales and only narrowly making payroll.  The least skilled hand might be laid off if business continues to be slow.

He figures the business is worth about 300k to 350k if he was willing to hold out for the right buyer over a 2 to 3 year period.  But he wants to offer someone a steal so long as they close fast - time has become his most precious commodity and means more than getting the best price.  He might take as little as 200k.  The business could also theoretically be split up into three separate business lines and sold off a la carte, which probably yields the most cash but is the most trouble.

Anyone here ever sell a machine shop?  Anyone here want to buy one in San Leon TX for below its value?  There 8,000 sq. ft. of multi-use space in a low tax district (about 2,700/yr total).  Gross revenue is lumpy between about 250k a year to up to 700k a year when he sells more HVAC machines. 

He has asked me to help sell the business as he and the wife are tied to the hospital for several weeks.  I intend to contact a few competitors and major customers to see if there is interest.  But to just locate people out of the general public is beyond the scope of my experience.  Is there a publication that lists such businesses?  Can a commercial real estate agent help?

Any ideas appreciated.

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Re: How to sell a machine shop?
« Reply #1 on: January 13, 2020, 01:17:37 PM »
I think the most popular one is BizBuySell, although you may have some local business brokers.

If the business is reliant on your Uncle for sales, you may find the value of such a business is limited to the value of the equipment/real estate and employee knowledge. You're essentially selling someone a job instead of a business...
The price will depend heavily on your Uncle's involvement vs the abilities/experience of the other employees.

Also, if I'm a competitor, I'm not likely to buy the business unless there is good name recognition. If you contacted me, I would just try to poach your clients/employees if they were worthwhile, so be careful going that route.