Manufacturing & Industrial · Buyer guide
Buying a Plastics Manufacturing business
Published · Reviewed by The Diligence Standard Team · Updated
a Plastics 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
Tooling, machine utilization, resin cost, scrap, customer programs and maintenance CapEx determine economics.
Risks to test
- Customer/program concentration
- Tooling ownership
- Resin volatility
- Machine CapEx
- Quality claims
- Maintenance backlog
Evidence to request and reconcile
- Program/job margins
- Machine data
- Tooling register
- Customer contracts
- Quality/scrap
- Maintenance
Decision questions
- Who owns molds/tooling?
- What machines need major maintenance?
- Which programs are profitable?
- How sensitive is margin to resin?
- What quality claims exist?