A shop is priced on what a buyer believes will still be running the year after you leave. The equipment, the approvals, the programs and the people are read as risk until they are documented as value. That documentation is the work.
You earned that program. Years of on-time deliveries, a first article that passed, a quality record clean enough to quote the next job. The relationship sits with you and a few people who have been on the floor twenty years. On the shop floor, that is the whole business. On a buyer's model, it is one line item marked concentration.
Your biggest customer is your biggest asset and your biggest risk in the same breath. A buyer underwrites the day that program walks, and prices it in from the start, no matter how good the relationship looks today. Winning the work was the hard part of running the company. Proving the work does not depend on you is the hard part of selling it, and almost nobody does that before the market is already looking.
A buyer in this market underwrites four things before they will talk about price. Each one is a discount by default, and a point of value once it is evidenced.
One or two programs carrying most of the revenue is the first thing a buyer models, and the first discount they apply. Who holds the relationship matters as much as the share of it.
A buyer separates real capacity from deferred maintenance. Machines near the end of their life read as capital they will have to spend, not value they are buying.
ISO, AS9100, Nadcap and customer approvals transfer on conditions. A buyer prices the risk that one lapses, or has to be re-earned after the sale.
Owner add-backs, related-party rent and personal expense run through the number. What is not evidenced the way a buyer's accountant tests it comes back out.
The same four things, turned from risk into value. This is the preparation a Value Protection Study and the Cordis MRI are built to run.
The revenue mapped by customer and program, the durability of each shown, and where it can be, broadened before the market ever hears the company exists.
A buyer pays more when the ability to quote work and run the floor does not walk out the door with the founder. That transfer is built, not promised.
Every adjustment filed beside the document that proves it, before diligence asks. An add-back without a document is a discount waiting to happen.
A maintained, documented set of machines is value. The same machines, undocumented, are read as risk and priced down.
He came ready to sign a sell-side mandate. We asked for ninety days of readiness work first: three customer programs documented, the add-back schedule evidenced line by line, and the quoting process moved off his desk and onto the floor. The preparation changed what a buyer could underwrite. It was worth $2.2 million to him at the close.
More in practiceThe Cordis MRI runs your own financials through the underwriting model of every buyer lane, and returns the range, not a single number. The Value Protection Study turns that read into a sequence. Both happen before anything goes to market.