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How Prospective Small Manufacturing Buyers Evaluate their Company Amid COVID-19

June 23, 2020 / Fran Brunelle
SHARESHARESHARE

The top priority voiced by potential acquirers of small- and mid-sized manufacturers can be boiled down to the ways in which COVID-19 has affected the profit and loss of a target company. Excuses will not be accepted, even if an obvious reason for a decline in operating profit is a decline in sales.

Several manufacturers during COVID-19 have actually experienced significant increases in sales revenues because the demand for U.S.-based suppliers has increased. The global supply chain has been interrupted during the pandemic—there is an effort to re-shore and source goods from domestic manufacturers.

While buyers want to see positive gross revenue data, they do not want to see a manufacturer suffer profit decreases. This can occur if a sales increase comes from higher sales of low-margin items (or a decrease of sales of high-margin products).