Steel Fabrication Business Key Risk Items

by a searcher

2 years ago

Looking at a steel fabrication business in Western US doing 8 figs revenue. Any thoughts on where the bodies are buried for something like this? If anyone has experience would love to hear how it went and what to watch out for. We have heard inventory is a big one.

Thanks!

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searcher

thanks Ben!

2 years ago | like reply | 0 likes

searcher from Emory University - Goizueta Business School

This is a commodity-driven business. The price and availability of steel is critical for your margins and your ability to retain longer-term customers. I would look at ensuring a good buffer of net working capital at closing, and ensuring supplier contracts are assignable. I'd spend a lot of time working with the head of sourcing to understand their process, how they have historically dealt with shortages and price changes.

2 years ago | like reply | 1 like

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