The following article is adapted from a conversation originally recorded for The Manufacturing Minute podcast, hosted by Megan Meador, Audit & Assurance Partner and Manufacturing & Distribution A&A Practice Leader at Brown Edwards. The discussion has been edited and formatted for readability while preserving the key insights shared during the episode.
In this episode, Megan sat down with Jeannie and Mike Keen of Sunbelt Business Brokers of Roanoke and Lynchburg. Mike and Jeannie have spent a decade as M&A Advisors, serving privately held companies. Together, their office has closed roughly 130 deals, representing $60 million in transaction value. Their work covers business valuation, value enhancement once initial valuation is done, exit planning, transaction strategy, marketing, negotiations and due diligence support - guiding owners through every phase of a sale. Jeannie brings a somewhat unexpected credential to the table: she's a licensed therapist, which turns out to be an enormously useful skill given how much of an owner's identity is tied up in the business they've built. Mike spent twenty-eight years with the Virginia State Police and performed Fraud Investigations as a CFE for the U.W. Attorney’s Office and the Attorney General’s Office.
Their conversation explores Getting Your Manufacturing Business Ready for a Sale, what to do if you’re approached by Private Equity, as well as the latest SBA Updates affecting the market.
I asked Mike and Jeannie a question I hear from clients constantly: why are so many manufacturing companies suddenly getting calls asking if they're for sale? Their answer came down to a few forces converging at once.
Private equity firms and strategic buyers see the value in what an owner has built over thirty or forty years — strong cash flow, a skilled in-house workforce, specialized capabilities and long-standing customer relationships. Buyers are drawn to manufacturers for a variety of reasons: added capacity that complements an existing portfolio, entry into a new geographic territory, new customers, complementary capabilities, or simply a faster growth trajectory through acquisition rather than organic growth.
There's also a bigger demographic story behind all of this. Roughly 10,000 baby boomers are reaching retirement age every day, a trend referred to as the “Silver Tsunami.” JPMorgan Chase estimates that over the next 10-15 years, roughly $12 trillion in assets will change hands, and a significant portion of that will happen through business transactions.
Their caution to owners: if private equity approaches you directly, don't mistake it for a casual conversation. PE groups are usually on a fact-finding mission, and they already know which risk areas they're evaluating. They'll have a team of attorneys and analysts behind them. Mike and Jeannie's advice is to have your own advisory team in place before those conversations begin.
So what happens after an owner gets that cold call or email, maybe signs an NDA, and starts talking? I asked what the biggest mistakes are at that stage.
Mike and Jeannie pointed out that a casual phone conversation doesn't look the same once you get to the later stages of a deal. Sophisticated buyers already have their attorneys and accountants in place, and whatever information a seller shares gets taken back to that team to evaluate fit and risk.
It's also easy to get, as Jeannie put it, “stars in your eyes” when a private equity group floats a number like a $30 million proposal in a letter of intent. But a headline offer doesn't equal proceeds. Owners need to understand what actually flows underneath that number — cash at closing, debt, working capital, rollover equity, earnouts, deal structure, seller financing, and real estate components all get negotiated. The purchase price and what the seller actually walks away with are not the same thing.
Their recommendation for owners heading into this stage:
We slowed down here to talk about what an owner should actually have in place once those calls start getting serious. Mike and Jeannie's advice starts simply: have a team. Know who your accountant and financial advisors are, and know your attorney, right from the start and ensure the team is all working cohesively toward your goals.
Jeannie was direct about one rule in particular: she never wants to see a seller sign a letter of intent before an attorney has reviewed it. Business owners who've run their company for forty years often don't understand the legal implications buried in an LOI, and she's seen that go wrong.
Their broader advice is to take an honest internal look at your business before a buyer ever does. No business is perfect going into a sale, but transparency about known deficiencies avoids the surprises that really derail deals. Buyers are ultimately asking two things: does this business make money now, and will it keep making money once the seller is no longer involved? Practical fixes, like making sure decision-making authority doesn't all run through the owner, or addressing customer concentration, are much easier to correct early than to explain later.
Mike and Jeannie recommend at least a three-year preparation period before going to market, and they consider even that a little on the low side. The reason: once a business goes to market, a lender pairing with a private equity group, strategic buyer, or individual buyer will do a three-year look-back on the financials to confirm debt service coverage matches what the buyer is asking to borrow. Profitability matters here too — not just top-line revenue, but the bottom line. Rather than reducing tax liability at the end of the year, the goals change for business owners leading up to a transfer of ownership. You want your business to appear as profitable as it can be so a lender can justify the DSC. Every dollar added back to the bottom line can translate into three to five dollars added to the eventual sale price, depending on the business's multiple when going to market.
I added one thought of my own here: when an owner brings in an accountant, an advisor like Sunbelt, a banker, and a lawyer, it helps enormously to let those advisors talk directly to one another. It takes a lot of the back-and-forth off the owner's plate. Mike and Jeannie agreed — those conversations are going to happen at some point, either up front or during due diligence, and it's far better to have them early rather than waiting until everyone is scrambling.
Mike shared a timely update: a new SBA rule under its updated Standard Operating Procedures, effective October 1, requires a Quality of Earnings (“QoE”) report for any deal over $3 million. This isn't limited to private equity or strategic buyer deals — it applies to individual buyers going through SBA financing as well, regardless of the price tag on the business.
This ties directly back to the preparation point above: the more reliable an owner's underlying monthly financial data is — revenue and expenses that genuinely reflect the business — the more useful a QoE analysis will be when it's required.
I asked Mike, given that he and his team have advised on hundreds of sales of privately held companies, what tends to surprise owners most once they're in due diligence.
His answer centered on exclusivity periods. Buyers often come to the table with an LOI asking for sixty, ninety, or even a hundred and twenty days of exclusivity. What that means in practice is the business comes completely off the market — the M&A advisor can't talk to anyone else about it during that window.
That loss of competitive tension between buyers costs the seller negotiating leverage. Worse, Mike explained, sellers can be lulled into a false sense of security once they're in an exclusivity period. If sales slip a little, or internal monthly reviews aren't happening as closely as they should be, and that decline shows up during the exclusivity window, some private equity buyers will come back with a lower offer — and sellers often feel obligated to accept it because they're already so far down the path with that group.
His broader point: financials don't have to be perfect, but they need to tell a clear, understandable story about the business. Sellers benefit from taking off their “owner hat” and putting on a “buyer hat” to think through what risks a buyer will be evaluating, well before they ever go to market.
I asked whether this is where Jeannie's past life as a therapist came into play. Mike and Jeannie agreed that this is a real and constant part of the work. Many M&A advisors will say a large share of their job is really acting as a psychologist or therapist for their clients. Sunbelt's advantage, as they put it, is having an actual licensed therapist on the team!
Part of their process is evaluating what they called an owner’s “future story” — what that person plans to do once they're no longer running the business. If those questions go unresolved, an owner can unknowingly sabotage a deal as it nears the finish line, simply because of unease about who they'll be once they're no longer the owner and operator of the company. It's a factor Mike and Jeannie actively consider when working with clients.
Toward the end of our conversation, Jeannie made a point I loved: manufacturing businesses are often the quiet backbone of the communities they sit in, even when that isn't obvious to the people living there. Making a business easily transferable to new ownership, she argued, tends to be the same thing as making it run well today — and that benefits far more than just the owner.
She gave a concrete example: Sunbelt advised on the sale of Virginia Steel and Fabrication, working with the owner for a couple of years leading up to the transaction. They identified a buyer that matched what the owner considered his ideal fit and successfully closed the deal. Earlier this month, Governor Spanberger announced that under the new ownership, Virginia Steel and Fabrication expanding from 17 employees to 51 employees, more than tripling the workforce and adding a $3.6 million investment in rural Bland County, Virginia.
Jeannie's advice to owners is to put the important ahead of the urgent — something that's easy to say and hard to do when you're running a business day to day. If you think you might sell in five years, you should be talking with M&A advisors, accountants, transaction attorneys, and wealth advisors now so that questions like tax implications and what comes after the liquidity event are addressed well before you go to market.
Mike shared a current example from his own pipeline: a referred business owner and his wife aren't planning to sell for another eighteen to twenty-four months, but he's already sent Mike his financials for early feedback, and Mike's team is introducing him to an attorney now, alongside the financial advisor he already has in place. The goal is to have everything ready well before he actually goes to market — so that when private equity calls, he's ready for it.
Jeannie's closing advice was simple: the first step is understanding the true value of your company today. Owners often have a number in mind, but it isn't always the actual figure the market would support. Knowing where you stand today tells you what steps come next — and if a Value or Wealth Gap are identified, you will have enough time to make adjustments and reduce risks before you go to market.
Sunbelt is offering a complimentary, no-obligation Broker's Opinions of Value for owners who just want a ballpark figure of what their company might sell for on the open market today. They also provide comprehensive valuations as well as other services.
If you'd like to reach Jeannie and Mike to learn more or just start the conversation, you can find them at www.sunbeltroanoke.com or by email at jkeen@sunbeltnetwork.com or mkeen@sunbeltnetwork.com or at 540-777-1585.
Thank you to Jeannie and Mike for joining me on the Manufacturing Minute — I really enjoyed the conversation, and I'm looking forward to seeing you both at the next event.