You want to sell your machining company? Then it's good to know what the acquisition market in the field of machining companies looks like. Industry and manufacturing is in a growth spurt, after shrinkage was visible. The industry does have some challenges ahead, including rising raw materials.
Although 2022 was a good year in terms of mergers and acquisitions for machining companies, it did not break the record year of 2016.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In the industry & manufacturing sector, which includes a machining company, an indicative range of EBITDA multiple of 4.6 to 5.5 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Want to buy a business or sell a business in the Industry & Manufacturing sector? With this Brookz Sector Monitor, we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in the Industry & Manufacturing sector. Because in any buying or selling process, thorough preparation gives peace of mind, overview and structure.
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There are many startups in the market every year, and small-scale organizations, so the number of businesses with one person working is very high.
In figures, the number of machining companies in 2024 looked as follows(CBS):
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A number of trends and developments will inevitably cause changes in the coming years, but also offer machining companies many growth and acquisition opportunities:
Leasing allows metalworking companies, such as machining companies, to use various machines for their clients. There is no need to make a high investment, however, because by leasing the machines, they are not capitalized on the balance sheet until the end of the term, according to MetaalMagazine.
In the manufacturing sector, as in healthcare and construction, there is a structural shortage of skilled workers. Skilled personnel who have the experience and knowledge to enter the market confidently are in demand. However, the supply is not there, so this is also a considerable challenge for machining.
More and more consumers want sustainable products. And the government is also putting increasingly strict sustainability requirements on the market. Entrepreneurs in the metal industry would be wise to review and implement their opportunities for sustainability. Modular products, lower energy consumption and sustainable material choices are some of the options with which businesses can distinguish themselves in this relatively conservative market, according to Rabobank.
