As an owner of a metal finishing or coating company, you’re probably constantly juggling things such as a customer demanding parts faster than you can deliver or an upcoming ISO, NADCAP, or key customer audit.
John MosserIncreasing insurance, labor, or compliance costs are also issues, as are filling a key manager position with a qualified, loyal candidate or updating a wastewater permit.
With all that on your plate, thinking about an exit or succession plan likely falls down your to-do list. Most owners only address it when an external event requires it.
Sometimes it is triggered by a cold email from a private-equity-backed acquirer asking if you are open to selling. Maybe it’s because you’re tired. Perhaps it’s because you realize how much of your net worth is tied up in a building, equipment, and a lot of people who depend on you.
Whatever sparks it, having a plan and understanding your options enables you to choose your future rather than react to it. Every owner’s situation is different. Some want a clean exit, some want to stay involved, and others want to keep the business in the family. Ultimately, the best decisions come from weighing all options against your own goals and circumstances.
What are your options? Let’s take a look at what is available to shop owners looking for an exit strategy.
1. Full Sale to a Strategic Acquirer
A 100% sale to another company, typically in the metal finishing or related industry. Acquirers are buying for strategic reasons beyond your business's potential growth today. Perhaps they can acquire an attractive customer relationship, consolidate operations, expand geographic footprint, add new capabilities, cross-sell services, or even limit competition that has been a thorn in their side.
Notable Advantages:
- Higher Valuation. Often, the highest headline valuations are seen, especially recently, amid multiple active global acquirers.
- Quicker to Close. Strategics “speak your language,” which can make due diligence easier and faster.
- Lower Financing Risk. Strategics typically have the balance sheet strength or readily available financing to close cash-heavy transactions without uncertainty or contingencies.
Notable Challenges:
- Loss of Control. Post-close decisions about locations, people, and customers are likely outside your control.
- Cultural Differences. Large corporate organizations may have different philosophies about operations, pricing, and management that vary significantly from those of privately held companies.
Who it works best for: Owners seeking a clean exit, strong valuation, and well-capitalized home for the business, even if that means they have limited operational influence after closing.
2. Private Equity-Backed Strategic Acquirer
Your business is purchased by a strategic buyer who is financed (partially or fully) by a private equity (PE) firm pursuing a roll-up in the industry. This is increasingly common in the metal finishing industry due to fragmentation, attractive cash flow characteristics, and diversification across multiple end markets and coating technologies. If you are a business owner, you have likely received one or several emails from business development firms that these acquirers retain to find companies for them to buy.
Notable Advantages:
- Rollover Equity. You can (or are sometimes required) to reinvest a portion of your sale proceeds into a minority position of a larger company and share in the future upside. When considering this potentially very valuable opportunity, it’s critical to understand what you are investing in and how it is valued.
- Growth Resources. The business will benefit from access to capital, new systems, and professional talent to support growth, add-on acquisitions, or capex projects that would be difficult to execute on its own.
Notable Challenges:
- Different Philosophies. PE firms vary widely: some invest heavily, while others prioritize cost-cutting. Doing your own due diligence on your potential acquirer is essential to finding the right match.
- Fund Timeline Pressure. Most PE investors aim for an exit or a significant liquidity event within 3-7 years. This can create pressure for growth and decision-making.
Who it works best for: Owners who want a competitive price, a sophisticated growth partner, another upside shot later, and are comfortable being part of a company with clear growth expectations.
3. Direct Private Equity Investment (Recapitalization)
A PE firm, independent sponsor, or family office invests directly into your company, usually buying a majority stake while you retain a meaningful minority position and leadership role. Your company becomes the foundation, and other companies are added to you rather than absorbed by another company.
Notable Advantages:
- Partial Liquidity, Not Full Exit. You receive a significant liquidity event at closing while retaining the potentially lucrative upside as the business grows and is sold again.
- Operational Continuity. You remain the central story for value creation. Your company is now the basis for the investment thesis, rather than just one of many potential add-on acquisition targets.
- Growth Resources. Similar to a PE-backed acquirer, the business will benefit from access to the same growth resources.
Notable Challenges:
- Governance and Control. Even if you retain a substantial minority stake and continue to run the business, major decisions will require board approval.
- Eventual Second Exit. The investor(s) will expect a future sale or recapitalization, so this is a step in the succession plan and not a definitive end.
Who it works best for: Owners who see a clear growth runway, want a material liquidity event, but also want to stay actively involved to build a larger business with institutional support.
4. Minority Investment and Flexible Capital Options
A minority equity or alternative capital solution could be provided by a family office, an SBIC fund, a private debt provider, or another “patient” investor. This option is a middle ground that provides owners meaningful liquidity or capital for growth while retaining voting control and day-to-day leadership. Common structures may include minority equity, preferred equity, subordinated or mezzanine debt, or senior or junior debt solutions.
Notable Advantages:
- Control is Preserved. You remain in charge of strategy, management, and culture while still accessing outside capital.
- Meaningful Upfront Liquidity. Thoughtful structures can deliver sizable personal liquidity events and growth capital without selling a majority stake in the company.
- Flexible Partners. Many investors will have more flexible requirements and time horizons with the ability to tailor terms to their situation.
Notable Challenges:
- Transaction Complexity. Preferences, covenants, and exit rights need to be assessed carefully to avoid inadvertently relinquishing practical control.
- Leverage Risk. Higher debt levels can increase sensitivity to downturns or fluctuations in business performance, potentially leading to financial stress.
Who it works best for: Owners who want to stay in control, need capital or personal liquidity, and are comfortable with a more sophisticated capital structure.
5. Internal Transaction (Family Succession or Management Buyout)
The business is transitioned to family members (children, spouses, siblings) or to existing management. This may involve a mix of gifts, seller financing, minority equity partners, private debt providers, SBA financing, or bank loans. Owners may also consider an Employee Stock Ownership Plan (ESOP), a tax-efficient way to transfer ownership and reward employees. Although this path typically results in a lower valuation, the goal is to retain insider leadership while providing a reasonable path to owner liquidity over time.
Notable Advantages:
- Legacy Preservation. The business stays in the family or with the team that you’ve built.
- Alignment and Continuity. The next generation of management is already in the business.
- Potential Tax Benefits. Longer-term planning, gifting strategies, or ESOPs can enhance after-tax outcomes when designed well.
Notable Challenges:
- Lower Valuation. Family members and management rarely match a competitive valuation from an external process unless paired with outside capital.
- Financing Constraints. The business now has to pay bills, service its debt, and invest to grow all at the same time, which may limit growth options new ownership can pursue.
- Family Dynamics. If multiple heirs have misaligned goals or objectives, succession can create tension or resentment.
Who it works best for: Owners who prioritize legacy and family continuity over liquidity or valuation.
6. Hold and Grow
You continue to operate the business, reinvest profits, and build value for a future exit. This may involve improving operations, taking on a significant investment project, pursuing add-on acquisitions, or strengthening the management team.
Notable Advantages:
- You maintain flexibility and can exit when it makes sense for you.
- Build More Value. If you improve operations and grow, the business may be worth significantly more in the future.
Notable Challenges:
- Execution Risk. Improving the business requires capital, management attention, and operational excellence.
- Market Risk. Industry cycles, competitive pressures, flat or declining performance, and customer loss can significantly erode business value.
- Timing Uncertainty. The market may not be as favorable when you decide to act. Buyer interest, valuation multiples, and capital availability can fluctuate.
Who it works best for: Owners who still enjoy running their business, have a clear operational roadmap and passion for growth, and have a long-term horizon to await the most opportune window to execute their exit plan.
Succession Plan on Your Terms
There’s no single “right” way to exit the business you’ve spent years building, and no two situations are the same. The right path depends on your financial goals, your family’s needs, and an honest assessment of how your company operates today. For most owners, the decision is as personal and emotional as it is financial.
The good news is that well-run metal finishing and coating businesses remain in high demand. Strategic buyers, private equity firms, and other capital partners continue to seek opportunities in this industry. Owners have more options than ever to monetize their businesses, and those who understand their options and prepare early are best positioned to transition on their own terms.
If you’re thinking about an exit, succession plan, or just trying to make sense of your options, don’t hesitate to reach out to me at john@triscendpartners.com.
John Mosser is Managing Director at Triscend Partners. Contact him at john@triscendpartners.com or visit www.triscendpartners.com.
