As reshoring initiatives ramp up American manufacturing, private equity groups are increasingly interested in acquiring machine shops and other manufacturing businesses.
If you’re considering making your company available for private equity acquisition, NTMA can help your member shop prepare for a profitable, successful transition.
Let’s take a closer look at the opportunities, risks, and rewards possible through a private equity acquisition.
But first. . .
Does Private Equity Have a Place in the Modern Machine Shop?
But like all mergers and acquisitions (M&A), there are pros and cons to consider before diving into private funding. Keep these factors in mind:
Private equity is a dramatic change in your shop’s structure
Private equity is not a loan. You are selling a portion (or all) of your business, which dilutes your share of the shop’s profits. However, a successful private equity partnership will enable growth that offsets the agreed-upon profit sharing and ultimately benefits everyone involved, from your employees to the leadership team to your most important asset: your customers.
Private equity should come with high-impact investor expertise
While a funding partner with manufacturing experience may seem ideal, the true value of an investor lies in their business acumen. Any private equity acquisition should be approached thoughtfully to ensure your business is a good match with the funding firm.
A bad match can result in devastating failure, but a healthy match will enable tremendous success for your shop and your future.
3 Ways NTMA Drives Successful M&A
NTMA is a guiding force for sustained US manufacturing growth. Here are three critical ways your NTMA membership can prepare your precision machining business for advancement.
1. NTMA helps stagnant manufacturers evolve into modern machine shops
To attract top-quality investors, you want your shop to be as healthy as possible, which involves modernizing it for a future full of potential. Start by identifying and clearly documenting areas of improvement.
- Tap into NTMA’s resources for training
- Leverage our peer-to-peer networking to learn how the most successful shops operate
- Get familiar with our leadership events that will help you (and eventually your private equity board) stay attuned to the pulse of the manufacturing industry
Don’t worry if you don’t have all the resources you need to address every issue; that’s why you’re seeking private funding, right? What matters is knowing wha
t your shop needs so you can find the right M&A partner.
2. NTMA delivers high-value industry data
We believe in letting your gut guide you—but your gut needs its own guide, and that guide should be data.
Performed four times each year, NTMA’s surveys and reports provide regular, meaningful benchmarking data that helps shop owners:
- Establish competitive and fair compensation packages
- Gain an in-depth understanding of today’s operating costs for manufacturers
- Anticipate market changes and understand current business conditions
- Evaluate their own company’s performance against industry benchmarks
NTMA’s survey-informed report results break down critical areas of success to help average machine shops become top performers. And top-performing shops are precisely what private equity firms aim to invest in!
Members-only perk: As an NTMA member, your survey participation rewards you with an individualized Financial Performance Report that analyzes your company’s position in the market. This annual report is 100% confidential and comes to you directly from our research group.
3. NTMA enables collective purchasing power
NTMA’s Affinity Partners and Industry Partners give even the smallest shop access to the cost-cutting benefits of bulk buying. Let that sink in. With NTMA membership, shops of every size gain tremendous savings typically reserved for huge enterprises.
Purchases you’re already making become more affordable, freeing up capital to invest in new improvements. Save on:
- Financial services
- Software and hardware
- Industry memberships
- and so much more!
With smart spending at your fingertips, you’ll be prepared to grow your business with purpose and intention.
Leverage Your NTMA Membership to Prepare for Private Equity Acquisition
Far from being a marketplace where private equity firms find companies to acquire, NTMA is focused on you, the manufacturer—owners, operators, leaders, and managers.
Whether you’re a shiny-and-new modern machine shop, a multi-generational family-owned venture, or a fully developed enterprise, the National Tooling & Machining Association is your industry advocate on Capitol Hill, your comprehensive workforce training resource, and your networking facilitator with a success-focused community of manufacturing professionals.
If you’re considering a private equity partnership, make NTMA part of that process. We’re here to help you succeed—before, during, and after acquisition.