Some background:
My family has owned and operated a small contract manufacturing business for 40 years now. I came on in 2019 to continue and eventually take control of the business.
I've wrestled at length with this, and have decided that I need to leave the company meaning we have to look at a sale. I told my aunt, the owner, that I would stay on up to 12 months to assist with preparation for a sale.
A big part of the reason I decided to exit was her lack of business planning & decision making, which naturally also makes selling the business difficult.
If I owned this business, I would cut 3-4 employees immediately. My aunt has told me recently that she still runs the business not to make money, but to take care of our employees... She refuses to let anyone go and continues to hand out raises.
I would consider purchasing myself but don't want to deal with the family drama or stress involved in laying off long term employees. I know I could make this company profitable quickly, but after 4 years of effort I don't see my aunt ever actually letting go of any of our processes, much less the company itself.
Today we are meeting with the company's CPA to discuss our options. I am pushing to have the business valued by a third party, and for my aunt to seek out a broker or some kind of advisor with experience selling a business. I believe she has very unrealistic expectations for how this will go and need a professional to share this opinion with her so that it might register.
The financials:
If anyone is willing, I would greatly appreciate a rough idea of what we can expect to happen and what the business might be valued at. Here is some of our financial history. Peak sales was in 2016 with $3.0M in revenue and $1.0 M net profit due to some large contracts we received.
Year
Revenue
Gross Profit/Loss
Net Profit/Loss
2018
$1.7 M
$1 M
-$120 K
2019
$1.6 M
$844 K
-$200 K
2020
$1.2 M
$650 K
-$298 K
2021
$1.7 M
$1 M
+$29 K
2022
$1.7 M
$860 K
-$142 K
Other assets:
We have 14 employees. 8 are dedicated to production, 6 are salary office employees. I'm confident that we only need 3 employees on the office side, with outsourced accounting/HR.
My family has owned and operated a small contract manufacturing business for 40 years now. I came on in 2019 to continue and eventually take control of the business.
I've wrestled at length with this, and have decided that I need to leave the company meaning we have to look at a sale. I told my aunt, the owner, that I would stay on up to 12 months to assist with preparation for a sale.
A big part of the reason I decided to exit was her lack of business planning & decision making, which naturally also makes selling the business difficult.
If I owned this business, I would cut 3-4 employees immediately. My aunt has told me recently that she still runs the business not to make money, but to take care of our employees... She refuses to let anyone go and continues to hand out raises.
I would consider purchasing myself but don't want to deal with the family drama or stress involved in laying off long term employees. I know I could make this company profitable quickly, but after 4 years of effort I don't see my aunt ever actually letting go of any of our processes, much less the company itself.
Today we are meeting with the company's CPA to discuss our options. I am pushing to have the business valued by a third party, and for my aunt to seek out a broker or some kind of advisor with experience selling a business. I believe she has very unrealistic expectations for how this will go and need a professional to share this opinion with her so that it might register.
The financials:
If anyone is willing, I would greatly appreciate a rough idea of what we can expect to happen and what the business might be valued at. Here is some of our financial history. Peak sales was in 2016 with $3.0M in revenue and $1.0 M net profit due to some large contracts we received.
Year
Revenue
Gross Profit/Loss
Net Profit/Loss
2018
$1.7 M
$1 M
-$120 K
2019
$1.6 M
$844 K
-$200 K
2020
$1.2 M
$650 K
-$298 K
2021
$1.7 M
$1 M
+$29 K
2022
$1.7 M
$860 K
-$142 K
Other assets:
- Manufacturing Equipment: $500 K
- Raw Material: $100 K
- Manufactured Goods (with orders in the next 12 months): $550 K
- Manufactured Goods (No orders, realistically we will sell ~20% of this): $1 M
We have 14 employees. 8 are dedicated to production, 6 are salary office employees. I'm confident that we only need 3 employees on the office side, with outsourced accounting/HR.