Participants in the Michigan Manufacturing sector work with pride knowing that manufacturing provides employment to all skill levels, attracts wealth into local communities, and offers better wages than service-sector jobs.
For all business owners, and especially manufacturing business owners, succession planning is the best way to ensure their legacy continues with as few hiccups as possible, such as operational disruptions, loss of customer trust, and legal issues.
There’s no time like the present to begin developing a succession plan for your manufacturing business to:
- Ensure Business Continuity
- Preserve Legacy & Values
- Minimize Financial & Tax Implications
Retain Customer & Supplier Confidence Brokers like Michigan Business Broker play an especially valuable role in succession planning due to the industry’s complexities, including specialized equipment, long-term contracts, and workforce stability.
When planning the future of your manufacturing business, we recommend starting with determining the right successor, whether to sell, and obtaining a professional valuation.
Identifying The Right Successor
Business owners must first decide whether to transition the business to family, employees (ESOP), private equity, or an external buyer. A broker will have access to industry buyers who understand manufacturing processes and can sustain operations.
Here are some other ways to choose and develop the right successor:
- Evaluate Internal Talent: Look at key employees who have leadership potential and understand the business’s operations.
- Family Succession Planning: If passing the business to a family member, a transition period with mentorship is ideal.
- Establish a Leadership Development Plan: Invest in training for potential successors.
Selling as a Succession Strategy
A business owner may choose to sell as part of a succession plan to secure their financial future, ensure the company’s long-term success, or transition into retirement without disrupting operations.
The process includes choosing a successor and obtaining a business valuation to determine its market worth.
A business broker facilitates this by confidentially marketing the company, vetting buyers, and structuring a seamless transition that preserves operations, workforce stability, and customer relationships.
Ensuring a Smooth Transition
Whether selling or handing over a business to a successor, manufacturing business owners should focus on key vendor relationships, sustaining skilled labor, and process continuity. If the owner is key to operations, a phased transition with a training period or consulting agreement can be negotiated.
Manufacturing businesses often also must consider continuity of safety regulations, environmental compliance, and certifications. Brokers work with legal teams to ensure the new owner meets these requirements and secures the necessary licenses.
A broker assesses tangible assets (machinery, inventory) and intangible factors (customer contracts, intellectual property, and brand reputation). They also consider industry trends, automation advancements, and supply chain stability to determine the best price. Through our valuation process, we can help answer the questions that will lead sellers to make informed decisions.
Note: This article was published on the Michigan Manufacturers Association’s website on April 25. Read more news about the Michigan manufacturing industry at https://mimfg.org/News-Events/Blog.