Successful Acquisitions

Toll Manufacturing

This phrase arose originally in the chemical industry. Toll manufacturing refers simply to an agreement to pay another company to manufacture something you need for your own product or product range. Outsourcing, in other words.

In my own practice, toll manufacturing has rarely been the sole tactic for external growth. It is more often one ingredient in a package of moves. For example, a client may divest a division that is really too far from his core business. But he still needs whatever that division produced, so he goes outside to have it made. Or a purchase is made that meets the client’s core growth need and fits his tightly defined criteria, but the target company happens to be deficient in one key element. We fill the ...