Why title beats location
A mold that sits next to a press the seller owns can still be bailment. A fixture welded to a table can still be customer property under a purchase order. If you are buying a manufacturing business, demand a schedule that splits owned iron, leased iron, liened iron, and customer property. Serials belong on the first three. Customer names belong on the fourth — late, under NDA.
Job shop versus product company matters here. Capacity shops fight customer-owned fixtures. Catalog files fight tools that travel with a SKU the seller actually titles. Invoices decide. The homepage does not.
Census CBP 2023 counted 284,452 U.S. manufacturing establishments; 68.4% have fewer than 20 employees (Source: Census CBP). On a shop that small, one customer’s tools can be the cell. Do not capitalize them as seller assets.
Where those tools must not sit
They must not sit in orderly liquidation value. The OLV estimator is for iron the seller can sell. They must not sit in the working-capital peg as inventory. They must not sit in an ABL borrowing base. A field exam that finds customer property inside “inventory” will haircut it to zero and then ask why the CIM lied.
BLS still prints a machinist annual mean near $58,750 and a welder near $53,750 (Source: BLS OEWS). Those wages are labor climate. They are not a reason to treat a customer die as seller goodwill.
| Pile | Title holder | May it price the deal? | Usual costume |
|---|---|---|---|
| Seller-owned M&E | Seller | Yes, via FMV / OLV / FLV | Brochure photo without serials |
| Leased iron | Lessor | Only if assumed | “We run it so we own it” |
| Customer-owned tooling | Customer | No | Cage location as ownership |
| Consigned material | Customer or vendor | No | One inventory total |
How the letter should freeze the pile
The letter of intent should say customer-owned tooling is excluded from the asset list, excluded from the peg, and scheduled before the count. If a tool’s title is fuzzy, pull the purchase order, the tool-steel invoice, and the bailment clause before anyone argues about price. SBA 7(a) still caps at $5 million (Source: SBA). Lenders still want a qualified M&E appraisal. Customer property is not that appraisal.
Main Street manufacturing in BizBuySell’s 2021–2025 set cleared at a 2.75x median SDE (Source: Iconic / BizBuySell). That marker does not put a customer mold into enterprise value.
What a buyer should ask on the first plant walk
Ask which cells run on customer steel. Ask which gauges leave with the account if the account leaves. Ask who pays for repair when a die cracks. Write the answers on the machine-list companion, not on this FAQ. The FAQ index owns the question.
What happens when a customer pulls the tools after close?
The cell can go dark. That is why title and stay risk belong in the same conversation as concentration. If the whale owns the die and the die leaves, you did not buy a product line. You bought hours that just lost their fixture. Write a schedule of which accounts can pull which tools, who pays freight, and whether a last-time-buy exists. Put stay or notice language in the letter when the account is large enough to matter.
Consigned resin, customer-owned steel, and gauges that travel with an auditor are the same pile with different nouns. None of them belong in OLV. None of them belong in target NWC. A field exam that finds them inside “inventory” will haircut them and then ask why the CIM used one number. Electronics kits on consignment with a short clock can be worthless before the exam lands.
A product company that actually titles the tools that travel with the SKU is a different file. That title should appear on invoices and on the asset list. A lapsed patent number in a CIM is not title.
Ask which cells run on customer steel. Ask which gauges leave with the account if the account leaves. Ask who pays for repair when a die cracks. Write the answers on the machine-list companion. A serialized seller list still needs make, model, year, control, serial, owned versus leased, and lienholder. Customer property is a fourth schedule, not a footnote on the first.
The FAQ index owns the question. The owner URL owns the machine-list columns and the FMV / OLV / FLV premises.
Fuzzy title is a diligence item, not a brochure photo. Pull purchase orders, tool-steel invoices, and bailment language before anyone argues about price. A mold next to a press the seller owns can still be customer property. A fixture welded to a table can still be bailment. Invoices decide. The homepage does not. Lenders still want a qualified M&E appraisal on a plant file. Customer property is not that appraisal and it is not orderly liquidation value.
Ask which cells run on customer steel and which gauges leave if the account leaves. Write a fourth schedule for customer property. Do not footnote it on the seller machine list. A field exam that finds those tools inside inventory will haircut them and then ask why the CIM used one number.
Jason Taken is a business broker, not an appraiser. Educational information only. Confirm title with counsel. After you read the owner URL, book a confidential intro call if the file is real.