How a $18M Manufacturer Added 20% to Their Sale Price
A founder-dependent manufacturer got exit-ready and closed at a valuation 20% above early estimates.
Table of Contents
Table of Contents
The Situation
A Profitable Business That Wasn’t Buyer-Ready.
The owners had built a legitimate $18M manufacturing business over two generations. With retirement three years away, they came to Frak Finance knowing they wanted to exit but without a clear plan for how to get there or what the business was really worth to a buyer.
Key Situation Factors
The Challenge
Three Issues That Would Kill the Multiple
The books were messy, the revenue was fragile, and the business only worked because the owners made it work. There was no defensible EBITDA baseline, no contract structure that gave a buyer confidence in future revenue, and no proof the business could survive a ownership transition. To a buyer, that combination doesn’t just lower the multiple. It raises serious questions about whether the deal is worth doing at all.
Key Risk Factors
- EBITDA inflated by owner-related and discretionary expenses that were never normalized
- No product line margin tracking and unpredictable working capital cycles
- Customer contracts too weak to hold up under buyer scrutiny
- Zero documented SOPs across production, procurement, and sales
- No management layer that could operate without the owners present
Our Approach
Our Approach
There was no single fix here. We worked through four connected problems in the right order.
1
Step 1
Set Up the Board Cadence
Locked meeting dates upfront, set a pre-read process one week before every meeting, and defined who owned what across the CEO, CFO, and board chair. Meetings had agendas, minutes, and action-item tracking so nothing fell through the cracks between sessions.
2
Step 2
Put Structure Around the Close and KPIs
Set a weekly leadership meeting rhythm, defined the month-end close window with a hard target of the 15th and no later than the 21st, and built KPI dashboards with named owners across sales, marketing, and finance.
3
Step 3
Built the 13-Week Cash Flow Model
Modeled weekly inflow targets against operating outflows of roughly $197K per week excluding rent and $250K including rent. Rent scenarios, funding needs, and runway were visible in one place and updated on a consistent basis.
4
Step 4
Tied Everything to a Budget and Growth Plan
Pressure-tested unit-level labor costs, revenue targets, and cash break-even assumptions at the location level. Set the FY2026 budget deadline at January 31 with year-end financials due February 15 and assigned clear ownership across the leadership team.
1
Step 1
Clean Up the Financials
Three years of financials got standardized, EBITDA got normalized by removing owner-related and personal expenses, and we set up monthly reporting with margin tracking by product line.
2
Step 2
Grow EBITDA
We went after a 30% EBITDA improvement through vendor renegotiations, cutting operational waste, repricing undervalued SKUs, and pointing the sales focus toward higher-margin and recurring revenue.
3
Step 3
Reduce Customer Concentration
We built a plan to bring new mid-tier customers in, locked existing ones into multi-year contracts, and set up proper pipeline tracking to reduce that 50% single-customer dependency.
4
Step 4
Make the Business Run Without the Owners
We documented SOPs across production, procurement, and sales, promoted an operations manager into a leadership role, and handed off key customer relationships to the wider team.
The Turning Point
When Buyer Conversations Changed Completely
By end of year two, EBITDA was up 28%, customer concentration had dropped to 35%, and the management team was running operations without the owners. Buyers stopped discounting the risk and started talking about growth. Multiple indications of interest came in above what early informal conversations had suggested.
Quantitative Results
Built the Infrastructure Before We Touched the Growth Plan
Metric
Before
After
Growth
ROAS
2.1
4.3
+105%
Revenue Growth
—
+38% YoY
+38%
Customer Acquisition Cost
High
Reduced
-27%
Conversion Rate
1.8%
3.5%
+94%
Average Order Value
$78
$102
+31%
Qualitative Results
More Than Just a Clean Exit
Clean financials and a management team that could operate independently changed how buyers approached the deal. Due diligence was straightforward, there were no last-minute price adjustments, and having multiple interested parties meant the owners weren’t negotiating from a weak position.
Key outcomes
- Financial statements held up through due diligence without adjustments
- No surprises on EBITDA normalization or working capital
- Multiple LOIs gave the sellers real leverage in final negotiations
- Ownership transition completed without operational disruption
- Management team was already running the business before close
Testimonial.
"I needed a solution that was
cost effective but high quality and high caliber. So that's where Frack comes into mind.. They take care of what your needs are and they tailor it exactly to what your business requires. You're not just hiring Frack, you're hiring an entire team of experts and you're not just getting this one individual on your team, you're getting our entire network."
The Results
Key Takeaways
Unclean Books Reduce Offers
Unclean financials don't just slow down due diligence. They give buyers a reason to lower their offer
Concentration Lowers Your Exit
A 50% revenue dependency on one customer will show up in your multiple. Buyers price that risk in.
Founder Reliance Cuts Valuation
Owner dependency is a valuation discount. A business that needs its founders to function is harder to sell and cheaper to buy.
Early Planning Maximizes Exit
Exit planning done three years out turned a 4.2x informal estimate into a 5x close. The timing of when you start matters.
Client Profile
Industry
Industrial Manufacturing
Company Size
~$18M annual revenue
Timeline
3 years
Stage
Pre-Exit
Engagement Type
Exit Planning
Financial Clean-Up
CFO Advisory
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