Growth Through Acquisition or Succession: Why Manufacturers Should Start Planning Earlier Than They Think

For many manufacturing business owners, the future of the company they've spent years building is both a business decision and a personal one.

Whether the goal is acquiring another business, transitioning ownership to family members or key employees, or eventually selling the company, the most successful outcomes often begin with planning years before a transaction is on the horizon.

During a recent Manufacturing M&A in the Middle Market panel, Joseph Confessore, Senior Vice President and Managing Director, Commercial and Private Banking at Washington Trust, joined fellow advisors from Duffy & Sweeney and KLR to discuss how manufacturers can prepare for strategic acquisitions, succession planning and business transitions. The event was hosted by Nterprisers, a manufacturing intelligence and networking platform focused on helping manufacturers make valuable business connections.

One theme emerged repeatedly throughout the discussion: business owners who start planning earlier typically create more opportunities for themselves and their companies.

Building Value Before You Need It

Many owners begin thinking seriously about succession planning only when retirement or a sale is on the horizon. By then, opportunities to strengthen the business, develop future leaders or address issues that could impact value may be more limited.

According to Joe Confessore, long-term planning gives business owners greater flexibility, whether their ultimate goal is a family transition, management buyout, acquisition or sale. He emphasized the importance of building a company that can operate successfully beyond its founder or current owner. 

"Anytime you talk about exit planning, you have to ask yourself, can the business run without you? Is there management succession in the ranks, and how deep is that bench?" Confessore said. 

For manufacturers, that means investing in leadership development, diversifying revenue streams and ensuring the organization can operate successfully beyond its founder or current owner. These actions can help strengthen the business today while creating more options in the future.

Strategic Acquisitions Can Accelerate Growth

Not every business transition involves stepping away from a business. Many manufacturers pursue acquisitions to expand capabilities, enter new markets, acquire talent or diversify their customer base. 

Successful acquisitions begin with a clear understanding of how a transaction supports a company's long-term strategy.

"The first question always is, what's the strategic reason for the purchase? Why are you doing it?" Confessore said.

Whether acquiring a competitor, expanding into a new geography or adding complementary products and services, manufacturers are most successful when acquisitions are tied to a broader business objective rather than growth for growth's sake.

The Value of a Strong Advisory Team

Ownership transitions and acquisitions can be among the most significant decisions a business owner will make. They often involve business strategy, family dynamics, tax considerations and long-term financial planning.

Throughout the discussion, panelists emphasized the importance of building a trusted team of advisors well before a transaction occurs. Bankers, attorneys, accountants, wealth advisors and other specialists can help business owners identify opportunities, address potential risks and prepare for the future. 

As part of that conversation, Deepa Krishnamurthy, founder and CEO of Nterprisers, noted that many business owners feel isolated when navigating major transition decisions.

"Even though your situation may be unique, there is a template out there in the world, the right number of experts who've seen aspects of this that they can guide you through. It feels less unique," said Krishnamurthy.

For manufacturers, access to experienced advisors can help transform what may seem like an overwhelming process into a structured plan with clearly defined goals and next steps.

Planning Creates More Choices

Some manufacturers ultimately sell. Others transfer ownership to family members, employees or management teams. Some continue growing through acquisition.

Regardless of the path, preparation matters.

At Washington Trust, we work with manufacturers throughout every stage of their journey, from financing strategic acquisitions and supporting organic growth to helping owners think through succession planning, ownership transitions and long-term wealth planning.

The earlier those conversations begin, the more options business owners typically have to protect what they've built, preserve their legacy and position their companies for future success.

For information about Washington Trust’s commercial and industrial solutions, contact Joseph Confessore, Senior Vice President and Managing Director, Commercial and Private Banking, at jmconfessore@washtrust.com or 401-348-1439.