How to sell a manufacturing business in Ontario.

What do buyers look at in a manufacturing business?

Customers and end markets

Buyers want to know who you sell to, how long they've been customers and how exposed you are to any one of them. A single customer at 30–40% of revenue is a real risk to a buyer, and it will show up in price or terms. They'll also look at the end markets you serve (automotive, construction, food, aerospace, consumer goods) and how cyclical they are.

Equipment and capital spending

Expect questions about the age, condition and maintenance history of your major equipment, and how much the business needs to spend each year to keep it running. If key machines are near the end of their life, a buyer will deduct the replacement cost from the price. An up-to-date fixed asset list with maintenance records helps.

The facility

Buyers look at the size and condition of the building, lease terms if you rent, zoning, power capacity and room to grow. If you own the real estate, you have options (see below).

People

Skilled trades, machinists and experienced supervisors are hard to replace in the GTA. Buyers want to understand your workforce: tenure, key people, wages against the market, whether you're unionized, and how much of the know-how sits with you rather than your team.

Operations and quality

Certifications such as ISO 9001, quality metrics, on-time delivery, scrap rates and how production is scheduled all tell a buyer how well the plant runs. Documented processes reduce perceived risk.

Inventory and working capital

Raw materials, work in progress and finished goods need to be counted and valued consistently. Obsolete or slow-moving stock is usually written down in diligence, so deal with it beforehand.

Environmental and compliance

For any industrial site, expect the buyer or their lender to require a Phase I Environmental Site Assessment, and further testing if it flags concerns. Health and safety records, permits and approvals will also be reviewed.

Tariffs and cross-border exposure

Many Ontario manufacturers sell into the United States or rely on imported inputs. Buyers will ask what share of revenue crosses the border, how your contracts handle duties and price changes, and how dependent you are on any single foreign supplier. Have clear answers, and show how you've managed recent changes.

Should you sell the building or keep it?

• Sell it with the business: one larger transaction, often with separate financing for the real estate.
• Keep it and lease it to the buyer on a long-term lease at market rent: reduces what the buyer has to finance and gives you rental income after the sale.

Either way, make sure the rent the business pays is at market rate before you go to market, so earnings aren't distorted.

How to prepare a manufacturing business for sale

• Get three years of accountant-prepared financial statements, with gross margin by product line or customer if possible.
• Build a fixed asset list: each major machine, its year, condition and replacement cost.
• Reduce reliance on your largest customers where you can, and put key customer agreements in writing.
• Develop a plant manager or production lead who can run the floor without you.
• Count and value inventory consistently, and write off what won't sell.
• Gather permits, certifications, safety records and any environmental reports you already have.
• Talk to your accountant about deal structure and the Lifetime Capital Gains Exemption well ahead of time. See Asset sale vs. share sale.

Data room checklist for manufacturers

• Financial statements, tax returns and monthly results
• Revenue and gross margin by customer and product line
• Fixed asset register with maintenance logs
• Inventory count and valuation method
• Customer and supplier contracts, purchase orders and backlog
• Facility lease or deed, site plan and zoning
• Environmental reports, permits and approvals
• Quality certifications and recent audit results
• Health and safety records, WSIB history
• Org chart, employee list and any collective agreement

Who buys manufacturing businesses in the GTA?

• Strategic buyers: competitors or companies in adjacent markets that want capacity, customers or capabilities.
• Private equity: usually for larger companies, often as part of a roll-up.
• Operating acquisition firms and individual buyers: buyers like Altigo that acquire one business at a time and run it themselves.
• Employees or management: usually with seller financing.

Altigo Partners buys established GTA manufacturers with $500K+ EBITDA and margins of 15% or more. One of our partners has run a wood manufacturing business, so we know the realities of the shop floor. We keep your team and your customers rather than consolidating them into another operation.