Valuing a Metalworking Machinery Manufacturing Business
Metalworking machinery manufacturers are dependent on other industries like automobile manufacturing. Because of the Covid-19 pandemic, industry revenue decreased 6.8% in 2020. With disruptions in the supply chain, production has continued to struggle. Machine shops are one of the industry’s largest markets. However, demand for machine shop services is projected to decline over the next five years. If you plan on buying or selling a metalworking business, it is important to understand the value of your metalworking machinery manufacturing business.
As a business appraiser, Peak Business Valuation works with individuals who are buying or selling a metalworking machinery manufacturing business. The first step in buying or selling is obtaining a business valuation. There are a few things that happen during a valuation. Discussing the key factors an expert uses in valuing a metalworking machinery manufacturing business is one of them. Keep in mind, the factors below are only a guide. Whether you are buying or selling a metalworking business, schedule a free consultation today.
Market Multiples for Metalworking Machinery Manufacturing
- SDE Multiple Average Range: 2.67x – 2.97x
- EBITDA Multiple Average Range: 3.35x – 4.12x
- REV Multiple Average Range: 0.42x – 0.67x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
The above are average market multiples for a metalworking machinery manufacturing business. A business appraiser uses market multiples when determining the value of a metalworking company. Increasing your understanding of your business’s worth will help you know what steps to take to increase its value. This is useful when expanding, obtaining, or maximizing the value of your business. Here are a few ideas to increase your business’s value. For a valuation, schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors when Valuing a Metalworking Machinery Manufacturing Business
Peak Business Valuation, business appraiser, values metalworking machinery manufacturing businesses. Below are some success factors that will distinguish your business and increase its value. See Value Drivers for Metalworking Machinery Manufacturing, Valuing a Metalworking Machinery Manufacturing Business, and Valuation Multiples for Metalworking Machinery Manufacturing for additional ideas.
Price of Steel
The price of steel is very volatile. Because of this, the price of the commodity affects the financial performance of the company. At Peak Business Valuation, our business appraisers will look at historical price averages to better understand a company’s operations for a normal year. This is often a better indicator of value.
Technology Advances
The manufacturing industry requires the best advances in technology. Positive use of technology encourages better productivity, efficiency, and lower labor costs. Another great benefit of technological advancements is a reduction in material waste. Many metalworking machinery manufacturing companies are hesitant to invest in technology. While costly at the beginning, technological advances will benefit the company’s overall profits.
Product Mix
The metalworking machinery manufacturing industry produces power-operated tools and machine accessories for finishing or shaping metal parts. There are over 6,400 metalworking machinery establishments in the United States. It is important to set your company apart from the others. This could include targeting a geographic location for marketing your product or promoting a certain product. Your company will have to adapt to the market demands. This could include adapting products your company offers to the market demands. A valuation expert will compare your product mix to that of industry averages and similar companies.
Summary
There are many important considerations when valuing a metalworking machinery manufacturing business. Understanding the value of a metalworking machinery manufacturing business is important if you are looking to buy, sell, or grow a business. Obtaining a business valuation can help you understand the fair market value. A business appraisal also identifies opportunities to maximize the value of a metalworking machinery manufacturing business.
Peak Business Valuation, business appraiser, values metalworking machinery manufacturers across the country. We are happy to answer any questions you may have about understanding the value of metalworking machinery manufacturers. You can reach out by scheduling your free consultation below.
