Industry: Machine Shop (Oil Field Services Equipment Manufacturer)
Location: Houston, Texas
EBITDA Multiple: $3.8
M&A Advisor: Steve Herrera

In this episode of the M&A Deal Team Podcast, we explore the intricacies of selling a Machine Shop specializing in Oil Field Services Equipment. Our expert guest, Steve Herrera, shares valuable insights and strategies for business owners considering an M&A transaction.

The podcast highlights key considerations and steps involved in preparing a business for sale, including the need for consistent profitability, good record-keeping, and a motivated seller. Steve emphasizes educating the seller on the process, potential offers, tax considerations, and expert advice, along with identifying the ideal buyer and accessing Private Investor Groups.

Common challenges business owners may face during the sale process, such as cyclical revenues and customer concentration, are discussed. Steve explains that addressing these challenges involves presenting consistent year-end results and contacting a high number of investors to find the right match.

Timing for selling a business is determined by the seller’s readiness and the recent trend of the business. An upward or consistent trend is preferred for a successful sale.

Steve delves into preparing for business valuation, considering factors like EBITDA, financial trends, margins, working capital, inventory, and market environment. Different deal structures, such as asset sales, stock sales, and mergers, are also discussed with a focus on tax implications and expert advice.

Due diligence is deemed extremely important to ensure the accuracy of financial information shared during the transaction. Business owners should focus on addressing Work in Progress and having a firm grasp of their financials.

Negotiation strategies to protect the seller’s interests and achieve favorable terms include generating interest from multiple parties to create an auction-like environment for final offers, maximizing selling price, and giving the seller a choice of buyers.

For business owners considering an M&A transaction, Steve advises finding a prepared and experienced team to guide them through the process, identifying common pitfalls, and preparing for various scenarios that may arise during the sale.

This episode offers valuable insights for business owners in the Machine Shop (Oil Field Services Equipment Manufacturer) industry, empowering them to navigate M&A transactions with confidence and achieve successful outcomes