1. Prepare the Business for Sale

• Financial Preparation

  • Clean up financials: Ensure books are accurate, audited, and reflect strong internal controls.

  • Normalize EBITDA: Adjust for one-time expenses, owner's compensation, related-party transactions, etc.

  • Forecasts: Prepare 3–5 years of financial projections and explain growth drivers.

• Legal and Operational Preparation

  • Resolve outstanding legal issues, contracts, or IP concerns.

  • Review environmental and regulatory compliance (important in plastics).

  • Document processes, SOPs, and key employee roles.

 

2. Determine Valuation

• For Example: Plastic manufacturing companies are typically valued at 4x–8x EBITDA, depending on:

  • Customer concentration

  • IP/technology ownership

  • Margins and growth

  • Industry segment (packaging, industrial, medical, etc.)

• Example: With $7M EBITDA, potential enterprise value could range from $28M to $56M.

• Hire a valuation expert or M&A advisor for a more precise estimate.

 

3. Assemble a Deal Team

• M&A advisor or investment banker (especially for deals >$25M)

• M&A attorney

• Tax advisor

• Accountant (preferably with transaction experience)

 

4. Identify Potential Buyers

• Strategic Buyers

  • Competitors

  • Vertical integrators (raw material suppliers, packaging firms)

  • Customers looking to bring manufacturing in-house

• Financial Buyers

  • Private equity firms (especially those with manufacturing portfolios)

  • Family offices

  • Search funds

• Your M&A advisor will typically run a confidential process to identify and screen buyers.

 

5. Market the Business Confidentially

• Prepare a Confidential Information Memorandum (CIM)

• Share CIM only under Non-Disclosure Agreement (NDA)

• Conduct initial buyer outreach and qualify interest

 

6. Manage the Sale Process

• Accept Indications of Interest (IOIs)

• Conduct management meetings and site visits

• Request Letters of Intent (LOIs) from serious buyers

• Negotiate terms: price, deal structure (cash vs. earnout vs. rollover), reps & warranties, etc.

 

7. Due Diligence and Closing

• Full buyer due diligence (financial, legal, operational, HR, etc.)

• Resolve red flags and clarify deal points

• Draft and negotiate final Purchase Agreement

• Coordinate closing and post-deal transition

 

8. Post-Sale Transition and Tax Planning

• Define your role post-sale (if any)

• Plan for tax-efficient proceeds distribution (consult tax advisor)

• Communicate with employees, suppliers, and customers