Selling a Textile & Apparel Manufacturing Business

Most textile and apparel manufacturers trade on a multiple of EBITDA or SDE, but the multiple moves with program stability, inventory aging risk, and how well margins hold up after deductions, rework, and freight or duty swings. Plants with repeat programs, documented OTIF and QC performance, and low owner dependence usually price better than highly seasonal, high-variant operations. For a starting point, use Rejigg’s free valuation calculator, then adjust for inventory reserves, chargeback history, and any approval or license constraints.

A broker is optional. In textile and apparel manufacturing, the main advantages are finding qualified buyers, keeping customers and mills from hearing rumors, and running a tight diligence process around inventory, deductions, and approvals. Rejigg covers much of that by pre-vetting buyers, collecting digital NDAs before access, and giving you a structured data room and offer comparison tools. Start with the preparation guide, then go to market once your inventory aging and deduction story are well supported.

Often yes for smaller U.S.-based cut-and-sew shops or mixed businesses with steady cash flow and clean reporting. Lenders usually focus on add-backs, how inventory is valued, customer concentration, and whether seasonality creates debt-service risk because working capital can swing hard between fabric buys, WIP, and retailer payment cycles. You can model payments with Rejigg’s SBA loan calculator. Expect to explain chargebacks, returns, WIP flow, and any license or approval items that affect revenue continuity.

Working capital is usually set as a target delivered at closing. Apparel businesses can swing widely based on fabric commitments, WIP sitting on the floor, and retailer AR timing, so buyers will want clear definitions and a look-back period that matches your seasonality. It is worth asking early what counts in the peg, including usable inventory, chargeback reserves, prepaid freight or duty, and disputed receivables. Rejigg helps you compare offers side-by-side so a strong headline price does not get offset by an aggressive working capital target.

Many deals close in 3–9 months, depending on readiness and how complicated inventory, approvals, and customer programs are. The usual time sinks are inventory usability arguments, retailer compliance and deduction documentation, and confirming whether licenses or approved-vendor status transfers on the buyer’s timeline. If you build a data room up front with financials, inventory aging, supplier and subcontractor details, audits, and customer terms, diligence moves faster. Rejigg’s data room and scheduling tools make it easier to run multiple buyer conversations without losing confidentiality or momentum.

Expect requests for monthly financials and tax returns, inventory listings with aging by style-variant or customer program, AR aging with deduction and chargeback detail, customer terms and key agreements, supplier and subcontractor lists with lead times and MOQs, and QC metrics such as defects, rework, and claims. Buyers often ask for social compliance audits, restricted substance testing, and any license or royalty agreements tied to products. Rejigg’s due diligence checklist pairs with its data room so you can upload once and control access by buyer.

Most buyers start with cash flow and then confirm the equipment base can reliably deliver that output. Expect questions about maintenance logs, downtime, spare parts, and whether any machine is a constraint, such as an auto-cutter, embroidery heads, bonding, washing, or finishing equipment. Some deals include a separate equipment schedule with serial numbers and a fair market estimate, especially when the asset base is heavy. Keeping a clean equipment list and maintenance history in Rejigg’s data room reduces late-stage renegotiations.

Earnouts often show up when the buyer sees uncertainty in seasonality, program renewal, customer retention, or the transfer of approvals and licenses. A common example is a large private-label program that depends on a factory audit re-approval or on maintaining approved-vendor status. Earnouts work best when they are tied to clear measures, such as revenue by program or EBITDA, with definitions that address returns, chargebacks, and pricing changes. Rejigg’s offer comparison helps you see how much value is truly at close versus contingent.

They affect valuation by increasing uncertainty in forward margins. If your economics move with country of origin, HTS classification, or ocean and air freight swings, buyers often underwrite more conservatively and negotiate tougher inventory and working capital terms. Strong sellers can show a real pricing policy, including pass-through logic, quote validity windows, and how often they reprice. It also helps to show a past disruption and how you managed it without blowing up retailer relationships or triggering heavy deductions. Keeping import and pricing memos in Rejigg’s data room makes this easier to prove.

Yes, and it usually requires a written supply agreement that stands up during peak season. Buyers will want clear transfer pricing, capacity commitments, lead times, quality responsibilities, and who pays for rework, defects, and chargebacks when ship windows are missed. You also need to define who owns raw materials and WIP at each stage and what happens when forecasts change. Rejigg’s deal tools help you track these supply terms across offers so the factory does not end up carrying all the risk.

Spec changes can erase profits in private label work, so buyers look for disciplined change-order control. Most strong operators require signoff before bulk, charge for development and repeated sample revisions, and set clear liability when tech packs change after fabric or trims are committed. Customer-driven changes are common, and that can be fine if pricing and terms reflect the real costs, such as expediting, rework, and scrap. Store your standard terms, a few real examples, and an exception list in Rejigg’s data room to show buyers you manage the exposure.

You need to build a consent track into the deal timeline, and the buyer’s profile can matter, including compliance history, financial strength, and distribution plans. Buyers will ask for the contract language, typical approval timing, and your audit and compliance record so they can price the risk. Surfacing consent requirements early usually prevents late retrades and rushed extensions. Rejigg helps by keeping sensitive license and approval documents behind NDAs and tracking consent steps alongside the deal timeline.

The biggest swing is often the difference between an asset sale and an equity sale, especially when inventory and machinery are meaningful. In an asset sale, inventory is typically taxed as ordinary income, and depreciation recapture on equipment can increase the bill. Structure can also interact with state taxes and multi-entity setups, such as separate brand and factory entities. A CPA or M&A tax advisor should be involved before LOI terms harden. Rejigg’s deal tracking helps you compare offers on structure, not just price, so you can focus on after-tax proceeds.

Non-competes are common because relationships with mills, subcontractors, and key retail contacts can follow the individual, not the company. Many buyers also want a defined transition period to cover vendor approvals, seasonal handoffs, and retailer compliance routines like EDI and routing guides. Terms should fit the reality of your business, including geography, channels, and duration, plus clear expectations for time and compensation if you stay on as a consultant. Rejigg’s transition planning guide helps you set boundaries before negotiations tighten.

Confidentiality matters in apparel because a leak can trigger retailer scrutiny or cause mills and contractors to de-prioritize you during peak season. A careful process stages disclosure: high-level performance first, then named customer and vendor details once intent is serious. Buyers should sign an NDA before seeing anything that could disrupt operations. Rejigg supports this with pre-vetted buyers, digital NDAs, and document-level permissions in the data room so you can share what is needed without oversharing too early.

Plan to clean it up before you go to market. Apparel buyers rarely accept fuzzy inventory and margin reporting because deductions, WIP timing, and returns can distort results quickly. At minimum, produce consistent monthly financials, reconcile inventory movement from purchases to WIP to finished goods to shipments, and document your valuation method and any obsolescence reserves. It depends on your size and systems, but even a simple, consistent schedule is better than a one-time scramble. Rejigg’s accounting imports and checklist-driven data room can help you organize the support buyers and lenders request.

In apparel manufacturing, the highest headline price can come with more givebacks in inventory exclusions, working capital targets, earnout definitions tied to returns and chargebacks, or a long transition requirement. Compare offers on cash at close, contingent payments, timeline and certainty to close, inventory and working capital mechanics, and any approval or consent dependencies. It is also worth stress-testing the earnout language for who controls pricing, spending, and customer mix post-close. Rejigg’s offer comparison dashboard puts terms side-by-side so you can pick the best risk-adjusted outcome.

Most owners do best starting 6–12 months before they want to close. Inventory cleanup takes time, especially after a season ends, and buyers want to see trends in OTIF, rework, and deductions, not one good month. You may also need time to qualify alternate suppliers and document owner-held routines like EDI compliance, routing guides, and shade approvals. If you wait until buyers are already asking, you lose leverage on inventory and margin debates. Use Rejigg’s prepare-to-sell guide and build the data room as you tighten operations.

The most common deal killers are inventory that is less usable than presented, earnings that shrink once deductions, rework, and expediting are normalized, and approvals or licenses that cannot transfer on the needed timeline. Buyers also walk or retrade when the supply chain is fragile and alternates are not qualified. Owner dependence is another frequent problem, especially when the owner is the only person who can navigate retailer compliance, shade issues, or vendor firefights. Rejigg helps reduce these risks by keeping diligence structured, documents controlled, and milestones tracked from LOI to close.