What should I check before buying a plastic fabrication shop?
A plastic fabrication shop sells skilled labour and quoting judgment more than tooling. Check the mix of repeat and one-off jobs, how past quotes compared with actual costs, how much the business leans on one or two fabricators, the condition of the CNC router and ovens, and how offcuts and scrap are stored and disposed of.
A fabrication shop cuts, routes, bends and forms sheet plastic such as acrylic and polycarbonate into displays, signs, guards, enclosures and custom parts. It differs from a moulding or extrusion business. There are no dies or moulds feeding long production runs. Work arrives as quotes, and the shop earns its living on how well it estimates and how skilled its people are. Your checks should follow that.
Look at the job mix
Ask for a list of jobs from the last few years, grouped by customer and type of work. You are looking for repeat customers, steady trades such as signage or retail display, and how much depends on a few large projects. Ask which jobs the seller expects to recur and why. A shop with many one-off jobs is not poor, but it needs more selling effort each year.
Test the quoting
Quotes drive profit in this trade. Ask to see a sample of past quotes beside the final job costs, including material, labour hours and rework. If the shop does not track actual costs, say so in your notes, because you will have to build that habit. Ask who prepares quotes today and whether the owner does it personally.
Understand who does the skilled work
A fabrication shop is only as steady as its best fabricators. Ask who the key people are, how long they have been there and what they do that others cannot. Talk with them if the seller agrees. If one person holds most of the know-how, plan for how you would keep that person and train another.
Equipment and scrap
Have the CNC router, bending equipment and ovens inspected, and read the maintenance records. Check dust collection and how offcuts and scrap are stored and removed. Ask whether any contractor or recycler is under contract. For the site itself, see what environmental checks you may need, and ask your lawyer to confirm anything that affects the premises.
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentEquipment valuation: How to do it
- 03Business Development Bank of CanadaGovernmentWhat is inventory
- 04Business Development Bank of CanadaGovernmentWhat are financial statements?
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