Multiple range for manufacturing business

investor profile

June 26, 2023

by an investor from University of Oklahoma in Oklahoma City, OK, USA

What are the EBITDA or SDE multiple ranges for plastic mold injection manufacturing businesses? Here's a little info about the business: $2.5 Million Revenue, $1.1 Million SDE, $950K EBITDA, been in business for over 20 years, they outsource all of the manufacturing. Outside of a small dip in 2020, revenue/SDE have both been slowly growing since###-###-#### revenue is up about 20% YTD. Top customer makes up 15% or revenue, top 5 customers make up 38% of revenue. 6 total employees. Very few add backs, the books look really clean. Asset sale, $500K inventory. Located in the US. Any help would be appreciated. Thanks!

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Reply by a searcher
from Texas A&M University in Elizabethton, TN, USA
I have 7 years experience running a business in the mold importing space. I am very skeptical of the margins you mention.

Is the manufacturing overseas? Is the manufacturing sole sourced? Overseas is super common and accepted, but you need landing capabilities and rework.

Mold making in general is super competitive. "Best" I've heard of is illegal Canadian operations that use NAFTA to skirt Chinese tariffs for US customers. You'll compete with them.

Mold making is CapEx for your customers. Make sure you aren't hanging yourself at peak interest rates with the top accounts.

Offer 3x. But add earnout for 2 to 3 years to address market risk.

Do DD / QoE. Margins too good without understanding what's unique there.
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Reply by an intermediary
from Western Washington University in Washougal, WA, USA
Too many questions to hazard any further opinions. I owned an injection molder in a past life and mold suppliers who outsourced all tool and die mfg were seen more as brokers than value added suppliers. Happy to have a conversation though if you'd like to talk it through for perspective.
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