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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Valuation of Manufacturing Company

The manufacturing sector​ has experienced steady decline over the past 10 - 15 years, faced with increasing competition and cost pressures from emerging economies and larger globally based manufacturing companies.

The sector has seen the exit automotive manufacturing and the scale back of many other larger sectors such as steel manufacturing, petrochemical processing and household appliance manufacturing.

However the industry has stabilised it's decline by focusing on automated processes, niche market products, high value products manufacture and precision and advanced manufacturing.

Supply of experienced management and a skilled workforce may influence the growth of some manufacturing sectors, and this may impact growth and business valuations.

Key Drivers of Manufacturing Valuations

The valuation of a manufacturing company can be as diverse as the sector itself, however there are some key factors that influence profits and hence business valuations. 

 

These include:

  • Market size and market share

  • Diversity of customer base

  • Cost of manufacture and scale

  • Condition of assets
  • Use of technology to automate processes
  • Level of automated reporting and integration with key management functions.
  • Staff structure and documentation of roles and KPI's
  • Certification to quality, OH&S and environmental standards.

EBITDA Margins range from a very low 4%-5% to as high as 25%, depending on the level of industry competition, technology and automation and process efficiency.

EBITDA Multiples for most SME-sized manufacturing companies will vary considerably across sub-sectors, and will be heavily influenced by size and scale.  Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 1.5x - 3.5x

  • Revenue of $10m - $20m: 3.0x - 5.5x

  • Revenue greater than $20m: 5.0x - 6.5x

Key Industry Statistics

According to IBISWorld, key statistics for the industry include:

  • Revenue growth contracted by 1.5% pa for 2012 - 2017, with total revenue of $386bn in 2017.

  • The number of manufacturing businesses also declined by 1.1% pa for the same period.

  • Contributes less than 5% to our GDP.

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?
SME Performance Whitepaper

Our Business Valuation Experience

Our business valuation experience in the manufacturing and process industries has included most sectors, including valuations for:

  • Timber mill processor

  • Biscuit manufacture

  • Sauce and condiments manufacture

  • Medical device design and manufacture

  • Metal products manufacture

  • Retrofitting four wheel drive business

  • Kitchen appliance manufacturing and wholesale

  • Engineered components manufacture to transport and construction sector

  • Process measurement equipment manufacture

  • Modular house and building construction

  • Modular water manufacture for high rise building industry

  • Metal polishing business

  • Metal tank manufacturing and engineering design

  • Pharmaceuticals and health products manufacture