Experience with manufacturing deals, and willing to chat?

searcher profile

June 04, 2019

by a searcher in Jackson, MS, USA

I know there's often a gap between a cash flow-based valuation and the owner's expected price which factors in capital equipment and other assets. How have you bridged this gap, and would you be willing to jump on the phone for a quick call to discuss? Thanks in advance!

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commentor profile
Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA
The question I think strikes at the heart of this question: are you selling as a going concern or selling as a liquidation? Sellers can't have it both ways. If they want to get paid for equipment and inventory, they should sell off the physical assets and close the doors. Otherwise, they need to come to the realization that their business must be valued according to the cash flow it produces. I am in a capital-intensive industry, happy to discuss further if desired.
commentor profile
Reply by a searcher
from Harvard University in San Francisco, CA, USA
Be disciplined and follow the advice Matt S provided above. DONT pay them for both. It's a triple dip if you do the seller gets the benefit of the depreciation expense, the value of the asset, AND the value of the cash flow the asset will/should produce.
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