I have been contact to assist someone or otherwise provide a casual opinion of the valuation and health of a shop he is interested in purchasing. I am in no way an expert on some of these matters and my opinion is only that, being provided as requested to help someone 'not' get hung.
I will be reviewing active contracts, the relationship with the customers, how efficiently the company is being operated, and the inspection and review of the machinery. This won't be a fancy in writing detailed report, I am doing this as a favor as an experienced person in the business.
I am just curious if there are any here that have went through this process and how the valuation was obtained? From what I gather, the legal beagles are in there but as I have mentioned, they know squat about machines, programming, parts, etc. From what little I gathered, this sounds like a shop that was riding it out because the owner was preparing to retire. Due to this, I am not expecting to see newer machines, and a few have already been flagged as pointless to own.
I have concerns his inexperience will lead down a road of getting sub par equipment and probably decent contracts but are being ran very inefficiently. All things that can be fixed, but that valuation should reflect that. The company is decades old and I have been in several shops where they still live in the 70s, complete with fax machine. I don't want to see him buying crap, then have to fix it all. There is no value in that.
Now, these are firm contracts, but I know customers can and do pull them. There is usually cancellation costs but that is about it.
In all ways, I have grave concern about anyone just buying a shop without experience. Sure, expertise can be brought in, but I rarely see these small companies do very well if the owner is not savvy to the biz. This is someone that has never made a part.
I will be reviewing active contracts, the relationship with the customers, how efficiently the company is being operated, and the inspection and review of the machinery. This won't be a fancy in writing detailed report, I am doing this as a favor as an experienced person in the business.
I am just curious if there are any here that have went through this process and how the valuation was obtained? From what I gather, the legal beagles are in there but as I have mentioned, they know squat about machines, programming, parts, etc. From what little I gathered, this sounds like a shop that was riding it out because the owner was preparing to retire. Due to this, I am not expecting to see newer machines, and a few have already been flagged as pointless to own.
I have concerns his inexperience will lead down a road of getting sub par equipment and probably decent contracts but are being ran very inefficiently. All things that can be fixed, but that valuation should reflect that. The company is decades old and I have been in several shops where they still live in the 70s, complete with fax machine. I don't want to see him buying crap, then have to fix it all. There is no value in that.
Now, these are firm contracts, but I know customers can and do pull them. There is usually cancellation costs but that is about it.
In all ways, I have grave concern about anyone just buying a shop without experience. Sure, expertise can be brought in, but I rarely see these small companies do very well if the owner is not savvy to the biz. This is someone that has never made a part.