Everyone’s talking about growth in manufacturing due to reshoring, automation and AI driven productivity. Almost no one’s talking about exit readiness in these companies.
Yet the biggest wins in today’s M&A market aren’t going to the companies with the highest revenue — they’re going to the ones that are best prepared to sell.
Here’s what I’m seeing across recent manufacturing deals 👇
1️⃣ The Real Drivers of a Premium Valuation
The “average” manufacturing deal trades around 5–8x EBITDA, but the best-run companies are getting 8–10x — even higher. What separates them? Five value drivers:
✅ Process efficiency: Buyers pay more for automation, data integration, and “lights-off” manufacturing that runs with minimal human labor.
✅ Revenue quality: Multi-year supply contracts or recurring consumable sales reduce risk and boost value.
✅ Customer resilience: If one customer accounts for 30% of revenue, your multiple drops fast. Diversify early.
✅ Competitive moat: Patents, specialized processes, or proprietary know-how protect margins and attract strategic buyers.
✅ Growth capacity: Buyers pay for what they can scale — underutilized capacity, new markets, or product extensions all count.
Efficiency, predictability, and defensibility create valuation lift — not just revenue size.
2️⃣ The New Power Players: Private Equity
Private equity firms have become the dominant buyers in manufacturing in recent years. Most aren’t buying standalone “platform” companies — they’re adding “bolt-ons” to existing platforms. They’re looking for businesses that fill a gap — new geography, new capability, or new customer base.
If you’re a potential bolt-on, here’s how to stand out:
✅ Research which PE firms already own companies like yours.
✅ Show how your business complements theirs — efficiency, relationships, or market access.
✅ Be ready for deep due diligence. Organized financials, equipment logs, and customer data build trust.
✅ Map out the next-stage growth story — not just what you’ve done, but what you enable.
Private equity buyers pay for clarity and scalability. Make it easy for them to see both.
3️⃣ Supply Chain Risk Is Now a Valuation Lever
Buyers used to skim over supply chain details. Not anymore.
After the last few years, they’re laser-focused on sourcing risk — especially overseas dependence or single-source suppliers.
Here’s what strong sellers are doing:
✅ Building redundancy — at least two qualified suppliers per critical input.
✅ Mapping their supply chain visually to show resilience.
✅ Documenting long-term supplier relationships and performance metrics.
✅ Creating continuity plans that address disruptions before they happen.
You don’t have to be disruption-proof — but you do need to prove you can adapt fast.
🏁 Final Thought
If you’re considering a sale in the next few years, the best time to prepare was yesterday.
The second-best time is now.
At VAP/Raincatcher, we help manufacturing owners identify the 3–5 changes that can most increase valuation within 12 months.