This article was developed in partnership with the Center for Advanced Manufacturing Puget Sound (CAMPS).
Most manufacturing businesses are not built overnight. Owners spend years, and often decades, growing their companies, navigating economic cycles, supporting employees, and reinvesting in the future of the business.
What many do not spend nearly as much time considering is how they will eventually leave it.
In my work with manufacturing business owners, that realization often becomes the starting point for a broader conversation about succession, retirement, family legacy, and long-term financial goals. Some owners are evaluating a potential sale. Others are considering whether the next generation or key employees should take over. Regardless of the path forward, one thing remains true: every owner will eventually transition out of the business. Planning ahead provides the greatest opportunity to shape what that transition looks like.
The Best Time to Plan Is Before You Need To
Many owners contact me after receiving an offer to purchase their company. While we routinely step in at that stage and help clients navigate successful transactions, some of the most valuable planning opportunities occur before a buyer enters the picture. When owners begin planning early, we can evaluate the business structure, review potential tax consequences, identify estate planning opportunities, and work with accountants, financial advisors, and valuation professionals to prepare for a future transition. Just as importantly, early planning helps answer a foundational question: What does a successful exit look like? For some owners, success means maximizing sale proceeds. For others, it means preserving a family legacy or rewarding employees who helped build the business. Understanding those goals often drives the strategy that follows.
A Purchase Price Is Only Part of the Story
When an offer arrives, it is natural to focus on the number attached to it. However, one of the first things we evaluate is not simply price, but structure. Whether a transaction is structured as a stock sale or an asset sale can significantly affect the seller’s tax consequences and post-closing obligations. The proposed buyer also matters. A strategic buyer may approach a transaction differently than a private equity group, and those differences can influence the overall economics of the deal. Part of my role is helping clients understand not only what is being offered, but what they will ultimately keep after taxes, transaction expenses, and other obligations are taken into account.
What Happens Once a Transaction Moves Forward
Business owners are often surprised by the amount of diligence involved in a sale. Once a transaction moves beyond the initial stages, buyers typically request extensive information regarding contracts, employees, compensation arrangements, intellectual property, insurance, litigation history, and regulatory compliance. At the same time, the parties are negotiating the purchase agreement and preparing disclosure schedules that provide detailed information about the business. While this process can seem overwhelming, thorough disclosures are one of the most important tools available to protect sellers. Properly identifying and explaining matters during the transaction can help reduce the risk of disputes after closing.
Family and Employee Considerations Matter
Many manufacturing businesses are family-owned, which means the legal issues are often intertwined with personal relationships. One of the most important pieces of advice I give family business owners is to communicate early. Transitions tend to be more successful when expectations are discussed before decisions are finalized rather than after. The same principle applies to key employees. Whether owners are considering ownership opportunities, retention incentives, or transaction bonuses, understanding what motivates employees can help create stability during a period of significant change.
Start With Your Goals
Before discussing transaction structures or legal documents, I often encourage owners to spend time understanding their personal and financial objectives. What do you need from the business to achieve your retirement goals? Would you prefer to keep ownership within the family if possible? Are there employees who should play a role in the company’s future?
Answering those questions provides the foundation for evaluating the available options. A successful exit is rarely the result of a last-minute decision. More often, it is the product of thoughtful planning, a strong advisory team, and a clear understanding of what the owner wants to accomplish. After spending years building a manufacturing business, owners deserve the opportunity to approach that transition with confidence and purpose.
If you are beginning to think about your long-term plans, even if you are not yet sure what your exit strategy will be, now is the time to start the conversation. The earlier you begin evaluating your options, the more flexibility you will have to achieve both your business and personal goals.
Susan Dippold is a Shareholder in Carney Badley Spellman’s M&A Group, and regularly represents companies in the manufacturing industry. To discuss succession planning, business sales, family business transitions, or tax considerations related to an ownership transfer, Susan can be reached at sdippold@carneylaw.com.
Link here to podcast interview with Kirk Davis, Director of CAMPS, on YouTube.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult an attorney for advice specific to your situation.
