Succession Planning for Michigan Manufacturers: How to Ensure Your Legacy Thrives

As participants in the Michigan manufacturing sector, we work with pride knowing that manufacturing provides employment to all skill levels, attracts wealth into local communities and provides better wages than service-sector jobs.

Succession planning is the best way to make sure this legacy continues with as little hiccups as possible, such as operational disruptions, loss of customer trust and legal issues.

There’s no time like the present to begin developing a succession plan for your manufacturing business to:

• Ensure Business Continuity
• Preserve Legacy & Values
• Minimize Financial & Tax Implications
• Retain Customer & Supplier Confidence

Brokers play an especially valuable role in succession planning due to the industry's complexities, including specialized equipment, long-term contracts and workforce stability.

When planning the future of your manufacturing business, we recommend starting with determining the right successor, whether to sell and obtaining a professional valuation.

Identifying The Right Successor

Manufacturing business owners must first decide whether to transition the business to family, employees (ESOP), private equity, or an external buyer. A broker will have access to industry buyers who understand manufacturing processes and can sustain operations.

Here are some other ways to choose and develop the right successor:

• Evaluate Internal Talent: Look at key employees who have leadership potential and understand the business’s operations.
• Family Succession Planning: If passing the business to a family member, a transition period with mentorship is ideal.
• Establish a Leadership Development Plan: Invest in training for potential successors.

Selling as a Succession Strategy

A manufacturing business owner may choose to sell as part of a succession plan to secure their financial future, ensure the company’s long-term success or transition into retirement without disrupting operations.

The process includes choosing a successor and obtaining a business valuation to determine its market worth.

A business broker facilitates this by confidentially marketing the company, vetting buyers and structuring a seamless transition that preserves operations, workforce stability and customer relationships.

Ensuring a Smooth Transition

Whether selling or handing over a business to a successor, manufacturing business owners should focus on key vendor relationships, sustaining skilled labor and process continuity. If the owner is key to operations, a phased transition with a training period or consulting agreement can be negotiated.

Manufacturing businesses often also must consider continuity of safety regulations, environmental compliance and certifications. Brokers work with legal teams to ensure the new owner meets these requirements and secures the necessary licenses.

A broker assesses tangible assets (machinery, inventory) and intangible factors (customer contracts, intellectual property and brand reputation). They also consider industry trends, automation advancements and supply chain stability to determine the best price.

About the Author

Nadir Jiddou is the owner of Michigan Business Broker (MBB), connecting Michigan business sellers with buyers for more than 18 years. He may be reached at nadir@mibizbroker.com.

Michigan Business Broker is an MMA Basic Associate Member and has been an MMA member company since November 2024.