Manufacturing & Industrial · Buyer guide
Buying a Food Manufacturing business
Published · Reviewed by The Diligence Standard Team · Updated
a Food Manufacturing business can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
SKU/customer margin, throughput, yield, food safety, labor, inventory shelf life and equipment determine value.
Risks to test
- Food-safety/recall exposure
- Customer concentration
- Perishable inventory
- Equipment CapEx
- Labor
- Certification/compliance
Evidence to request and reconcile
- SKU/customer margins
- Production/yield
- QA/recall records
- Inventory aging
- Equipment
- Customer/vendor contracts
Decision questions
- What recall/quality history exists?
- Which SKUs/customers are profitable?
- What inventory is at risk?
- What equipment maintenance is due?
- How constrained is capacity?