Manufacturing & Industrial · Buyer guide
Buying a Packaging Manufacturing business
Published · Reviewed by The Diligence Standard Team · Updated
a Packaging 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
Customer programs, substrate costs, machine utilization, setup/waste, quality and equipment CapEx determine value.
Risks to test
- Customer concentration
- Input cost volatility
- Equipment CapEx
- Quality claims
- Owner sales
- Working capital
Evidence to request and reconcile
- Customer/product margins
- Machine hours
- Waste reports
- Equipment
- Customer contracts
- Inventory/AR
Decision questions
- Which programs recur?
- What waste is normal?
- What equipment investment is due?
- How concentrated are customers?
- Can pricing pass through material changes?