Finance question
Can I get finance to buy a manufacturing business?
Often yes. Lenders split a manufacturing purchase in two: the plant, which has a resale market, is funded against the equipment, and the goodwill is supported by cash flow, cash and property. In our guide's worked example at a $1,200,000 asking price, debt is about 41% of the cash needed, subject to lender assessment.
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The short answer
Plant is the easy layer, goodwill is the hard one
Manufacturers are priced on the profit left after the owner is paid, with the plant usually included in the price. Our manufacturing business guide surveyed 14 live listings with asking prices from $180,000 for a powder coating shop to $3.1m for a commercial kitchen manufacturer. Brokers price them at about 1.5 to 5 times adjusted earnings, and the nine listings that show profit imply 1.8x to 3.1x, which is our arithmetic.
Lenders treat the two halves of the deal differently. Plant with a resale market, such as CNC machines, press brakes and forklifts, is funded against the equipment itself. Goodwill has nothing to repossess, so lenders look to property, cash and the cash flow of the business. The guide notes that specialised or niche equipment that is hard to value or resell typically costs more to finance, and some lenders decline customer-concentrated or owner-run businesses.
That is why the customer list matters as much as the machines. One dominant customer cuts the multiple, and lenders prefer customers across several industries, written supply terms and an order book that carries the business through handover. Ventas is a broker across 40+ lenders, not a single bank, and there is no upfront fee to you; the lender pays us on settlement. If the plant is the main asset, the manufacturing finance page covers the equipment side.
Do you qualify?
What a lender looks at on a manufacturing purchase.
Trading history
Two to three years of accounts that reconcile to lodged BAS and bank statements.
Customers and orders
A spread of customers, written supply terms and a confirmed order book.
The plant
An equipment register with ages, service records and finance owing.
The premises
A committed lease at least as long as the loan, or a factory you can lease or buy.
How a manufacturing purchase is typically funded
Plant funds against itself
Machines with a resale market can carry their own equipment loan.
Fixed plant resells poorly
Anything bolted to the building is valued low, so expect a lender to discount it.
Property can fund the gap
A loan on your home or other property can cover the equity portion.
A worked example
From our guide: a manufacturer at a $1,200,000 asking price, split $620,000 goodwill, $450,000 plant and $130,000 stock, needs about $1,340,000 in cash once $15,000 of legal, $5,000 of licence and lease costs and a $120,000 working capital buffer are added. $300,000 of equipment finance and a $250,000 acquisition loan cover $550,000. The other $790,000 comes from savings or a property-backed loan. Illustrative only.
Common questions
Frequently asked questions
Can I finance the machinery separately from the goodwill?
Often yes. Plant with a resale market can be funded as equipment finance secured on the machines. Lenders value it at what used plant would fetch, which can sit well below the vendor's figure.
Why do lenders ask about my customers?
One dominant customer is a risk. Our guide cites broker advice that it cuts the multiple, and some lenders decline customer-concentrated or owner-run businesses. A spread of customers and written supply terms help.
Is stock included in the asking price?
Often not. Stock and work in progress are usually counted near settlement and paid at cost on top. Adelaide's $625,000 fencing listing, for example, adds stock estimated at $35,000.
Does transfer duty apply to a manufacturing business?
It depends on the state. New South Wales generally charges duty on fixed plant as a fixture, and Queensland charges it on goodwill, stock and plant. Get the split written into the contract and confirm it with your accountant.