49. Think Like a Buyer: How to Maximize Your Shop’s Value Before You Sell

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Most shop owners never sell a business before the day they actually sell theirs. You build something for thirty years, then one phone call later you’re trying to figure out what it’s worth, what the buyer is really paying for, and why the number in your head doesn’t match the offer on the table. The fix is simple to say and hard to do: start thinking like a buyer long before you ever plan to sell.

In this episode I sat down with the deal team from CLA (Phil Hanke, Erin Mickels, and Brady Paschke), to walk through what actually moves the value of a manufacturing business. We’re in the middle of a massive wave of baby boomer owners heading for the exit, and a lot of them show up ready to be done today, with no runway and no plan. That’s rarely the best place to sell from.

We get into the math and the art behind it. Your shop trades on a multiple of adjusted EBITDA, but where you land in the range, anywhere from two times to six in precision machining, comes down to the stuff that doesn’t show up on a single line: how clean and consistent your books are, how concentrated your customers are, and how much the whole operation depends on you. If a buyer thinks they’re buying a job instead of a business, you get discounted.

Then there’s the part that wrecks more deals than price ever does: structure. Net proceeds, not the headline number, are what actually land in your account. We talk through purchase price allocation, working capital, earn-outs, and seller financing, and why you want those conversations on the table at the letter of intent stage, not six months into diligence.

And we don’t skip the human side. This is usually the largest and most emotional transaction of an owner’s life. We get into legacy, the arrival fallacy, and why knowing your why and your next chapter matters as much as the wire that hits your bank account. If you’re anywhere from one to fifteen years out from a transition, there’s something in here for you.

What’s Covered in this Episode

• (0:00) Meet the CLA crew: Phil Hanke, Erin, and Brady join Mike
• (3:34) Why now: a wave of boomer owners retiring with no succession plan
• (5:18) Readiness: a 3 to 5 year runway beats selling off a triggered event
• (6:40) What a buyer actually buys: your earnings, not your new machines
• (9:17) Cleaning up the financial house: add-backs, owner comp, related-party items
• (11:20) The owner-reliance question: can the business run without you?
• (13:40) Messy books get discounted; clean books are step one
• (14:52) “Am I buying a job or a business?” The buyer’s real worry
• (18:03) The range in precision machining: 2x to 6x, and what moves it
• (20:02) Why size matters and enterprise value basics
• (23:14) The three-year rule: What you can still move late in the game
• (25:51) How Factur helps suppliers build a consistent sales pipeline
• (27:00) Step two: personal financial planning, know what you need to net
• (30:45) A client story: net proceeds, not headline price, got the deal done
• (32:34) Where deals break: purchase price allocation and working capital
• (35:43) Earn-outs and seller financing: bridging a valuation gap
• (40:50) How to get started: reflect on internal vs. external options
• (43:21) Build your advisor team, starting with your most trusted pro
• (46:53) Let Navu answer the hard questions for you
• (48:07) The emotional side: selling your life’s work
• (53:36) Define your purpose before you sell

Resources Mentioned

• Build a consistent sales pipeline with targeted outreach and a free custom report from Factur
• Add AI chat to your website so buyers get accurate answers in real time with Navu
• Explore practical manufacturing insights from CLA on profitability, automation, growth, and more at CLAConnect.com/makingchips

Connect with the CLA Team

• Connect with Phil Hanke on LinkedIn
• Connect with Erin Mickels on LinkedIn
• Connect with Brady Paschke on LinkedIn
• Reach the full team and browse their resources at claconnect.com