Your Life’s Work is Worth More Than Your Inventory: How Technical Due Diligence Helps Preserve Manufacturing Business Through a Change in Ownership
Big W is now offering technical due diligence to investors who want a clean, risk-based assessment of their target’s quality system and operations. We are the only known consultancy that is highly versed in the requirements and customer expectations of PQR 1020, PQR 1050, & PQR 1060, which govern nuclear weapons production. Additionally, we are well-versed in AS9100 & ISO 9001, ITAR, CUI, and other regulatory requirements frequently encountered in aerospace and defense work. We bring the experience of an AS9100 Lead Auditor, more than a decade in product safety critical applications, extensive project management experience (PMP certified for over 10 years), and more than 20 years of Army leadership.
Our Technical Due Diligence Operating Model
Speed and discretion are critical during mergers and acquisitions. We aim for a 2 week turnaround, when possible, between initial call and report delivery. A 3-5 day on-site assessment informs a report that aims to define:
Whether the company’s quality certifications are current, defensible, and transferable under new ownership.
Evaluation of the company’s quality risk profile, with necessary actions defined and scoped to remediate any gaps
Evaluation of where processes may need work to facilitate growth.
Throughout any engagement, we operate within NDAs as specified, with the knowledge that any breach in confidentiality can easily spoil a deal.
Why We are Passionate About This
We have personal experience with what happens when a business ends due to owner retirement. I’ve experienced it first-hand as the son of a sole proprietor and later as a defense prime customer. While closing a business due to retirement is sometimes inevitable, and sometimes the right choice, there are many circumstances where a transfer of ownership can prevent the loss of value that comes with business closure that affects owners, employees, and customers alike.
With an increasing number of manufacturing business owners nearing retirement, we are excited to work with investors who want to preserve and build upon the legacies of these manufacturers. A company’s story doesn’t have to end with retirement.
Preserving Value: An Owner’s Perspective
One of the saddest days I remember was when my dad auctioned off Big T Industrial Service. The room was somber and full of many of his colleagues and customers alike. I watched his parts inventory and tools get auctioned off for pennies on the dollar. The tools seemed to fetch a decent price, mostly from his friends that wanted to contribute to Big T’s sendoff, but there just wasn’t much market for boxes of assorted oil filters, seals, and other various parts.
What was even more sad to see go was the stuff that couldn’t be auctioned: The customer relationships, brand loyalty, client list, and business processes that made him successful. With Big W recently celebrating its first anniversary, I personally feel the blood and sweat that it takes to build customer relationships, brand loyalty, and reliable processes. It’s the scariest work, and by far the most pioneering and personally taxing.
He did what he could. He referred his clients to others he could trust to make sure they were taken care of after he was gone, for no other reason than it was the right thing to do. He also tried years earlier in bringing my brother onboard, in hopes to be able to pass it on, but after giving it a shot decided it wasn’t for him. Unfortunately, there just wasn’t much market for a sole proprietor mobile industrial repair service.
For a manufacturer who has a facility, equipment, employees, quality certifications, and an existing pipeline of work, this is a very different story. It’s an even bigger deal if this pipeline includes defense subcontractor work. A price tag can absolutely be put on these things; in fact this is one of the few ways to buy your way into this type work.
A buyer who does technical due diligence is a buyer who understands what you’ve built. Big W works with investors who are focused on long-term results; buy and flip or asset-stripping private equity is simply not a good fit. The investors we work with want the story to continue, and our approach focuses on preserving your company’s legacy and keeping your existing customers happy for years to come, while responsibly expanding and continuing to build on the sweat equity you’ve spent years creating.
Big W’s Advantage: A Customer Perspective
Watching one of your suppliers close their doors isn't just sad, it can be quite expensive. Complex components are often single or sole-sourced, and standing up a new supplier can cost up to 7 figures per part number for nuclear weapons components. Mergers and acquisitions, when handled incorrectly, can be just as painful and expensive.
We have been the customer to companies who underwent mergers and acquisitions. Some went well, others resulted in painful and sometimes dramatic removal as a supplier. We have seen what went alright, what problems arose, and anticipate your customer’s concerns and expectations. This experience is critical when your client base is one of your biggest assets. Losing these customers during or after transition is hugely detrimental to the success of any transition.
Our assessment is focused on risk, identifying where second and third order effects of a transition could result in loss of tribal knowledge or process control, and where additional resources or effort should be focused to improve stability or allow growth.
Customer confidence is maintained through proactive and regular communication, addressing concerns they are likely to have in such a scenario, and following up over time to ensure results continue to be delivered as expected.
Summary
Big W's technical due diligence gives investors a risk-focused view of a target's quality system, certifications, and processes. We bring deep familiarity with aerospace and defense requirements, plus the perspective of a customer who has been through several mergers and acquisitions. In about two weeks you receive a report that analyzes a target's certifications, risk profile, and risk readiness.
Closing
Every manufacturer that closes its doors takes something with it: customer relationships, hard-won processes, and the trust of employees and clients. Much of that value is lost at the auction block, but it doesn't have to be. With the right buyer and a clear view of the risks, ownership can change hands while the business, and the people who depend on it, carry on.
A company's story doesn't have to end with retirement. Our goal is to help make sure the next chapter is a strong one.
Call to action
Considering an acquisition in aerospace, defense, or nuclear manufacturing? Let's talk about what a technical due diligence assessment can tell you before you close.
Thinking about selling? Ask us how a readiness review can help you attract the right buyer.
Contact Big W Engineering Solutions at Adam@BigWengineering.com or 913-399-6564, or schedule an initial call. All inquiries are handled in confidence.
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