Assessing a manufacturer from an M&A perspective
Company value depends on both financial performance and the ability to sustain it. Production, management, cash conversion and risks need to be assessed together.
Investment thesis and business model
The company’s market position, sources of growth, competitive strengths and management capabilities form the basis of the investment thesis.
Profitability and cash generation
Revenue growth, gross margin and EBITDA should be considered alongside non-recurring income and expenses, depreciation classification and the quality of net earnings.
Working capital and the balance sheet
Inventory turnover, receivables collection and supplier payment terms shape working capital requirements. Debt, cash and investment needs also warrant separate assessment.
Valuation and transaction structure
Sustainable cash flow, financial leverage and investment needs feed into valuation assumptions. Price, payment terms and capital structure need to be considered together.
Key risks
Customer concentration, slower collections, rapid inventory growth, one-off profits and heavy debt-service obligations require close attention.
What supports value
Recurring demand, strong cash generation, a balanced financial position, scalable operations and effective management support the company’s attractiveness to investors.