Considering a target in the industry and about to submit LOI. What are some considerations for manufacturing businesses specifically? How have deals fallen apart, what specific issues have you run into that led to a larger valuation gap, what should we look at from a product, equipment, talent diligence perspective?
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On the gross profit side the key things to establish in manufacturing are how secure the GPM is, whether cost increases can be effectively passed on to customers (or whether there would be a lag) and whether there is anything exceptional that has distorted performance from the norm.
Get as much detail as you can on the level of talent currently in place - will you have to manage heavily on-site to keep things going, or is the team and operation mostly self-sustaining with some guidance and input from you?