Brick Manufacturer

March 14, 2024

by a searcher in Washington, DC, USA

We are reviewing a brick manufacturer and distributor as a potential acquisition target. Would love to connect with anyone who has experience in the industry.

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Reply by a searcher
from Manhattan College in Port St. Lucie, FL, USA

Thanks ^redacted‌ for the tag. Although not in my wheelhouse, this is a volume low margin business. You want to have solid contracts, suppliers, and partners in place and will have to talk to all of them to make sure that they are loyal. My main challenge with low margin business is that you are always a lower price away from losing the deal, a supplier, a partner, etc. However, if the acquiring this company helps you corner the market and the entire supply chain then you don’t care about the margins because you’ll never pay for someone else’s profit. Plus anything you sell external is a plus.

Reply by a searcher
from Hillsdale College in New York, NY, USA

We looked pretty closely at a brick manufacturer. Interesting insofar as it's a very limited radius that you can sell (but less limited than cement). I'd make sure you understand the fixed cost base and how it will perform if volumes decrease by 20% or more for a year or two -- construction cycles can be brutal. But also very localized, so while the economy sucks overall, a brick manufacturer in Kansas might be having a boom year, or vice versa. Also look at equipment. It won't be new (proably 30 years old) but you want to know if it's in good shape. You'll have to replace or repair some of it and that can be very expensive.

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