Automotive Test & Measurement Equipment Manufacturer, 1988 Southeast Michigan

$1.6M

Revenue

$516K

SDE

2.8x

Multiple

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Full Editorial Writeup

This is a 37-year-old engineering and manufacturing business that designs and builds specialized test, measurement, calibration, and data-acquisition equipment for automotive production and quality-control applications. The company keeps engineering, machining, electronics, assembly, calibration, repair, and technical support all under one roof in Southeast Michigan, which gives it control over both the custom-build side and the aftermarket service side of its economics. On roughly $1.58M in revenue it throws off $516K in SDE, a normalized margin near 33%, which is strong for a small industrial shop with only 8 full-time employees.

What makes this more than a job shop is the installed base. Every unit sold creates a downstream stream of replacement, service, repair, and recalibration demand from customers who already trust the equipment and cannot easily rip it out mid-production line. That installed-base pull, plus direct customer relationships and deep application knowledge, is the real moat here and separates it from generic equipment vendors and outsourced engineering firms.

The obvious risk is concentration: this serves the automotive sector, which is cyclical, capital-intensive, and mid-transition to EV. A technically capable owner-operator or a strategic buyer in test and measurement or industrial automation is the natural home for this. The real estate is company-owned but sold separately for $1M, so the $1.419M asking price is a clean operating-business purchase at 2.75x SDE, and the deal is SBA pre-approved.

Why we like it

Earnings quality is genuinely strong for a shop this size: $516K SDE on $1.58M revenue is a ~33% margin, well above the 10-15% typical of contract manufacturers. The 2.75x multiple on that cash flow is reasonable, and SBA pre-approval means a buyer can put modest equity down and let the business service the debt.
The moat is the installed base and switching costs, not just labor. Once this equipment is embedded in a customer's production and QC line, they come back for replacement units, service, repair, and recalibration rather than re-qualifying a new vendor. That produces sticky, repeat revenue that is far more durable than a one-off custom build.
There is a clear operator lever the current owner never pulled: dedicated sales coverage. The listing explicitly notes growth from adding technical sales, expanding digital visibility, and deepening penetration with existing accounts, meaning the business has been coasting on inbound and relationships while leaving pipeline growth on the table.
Vertical integration under one roof (engineering, machining, electronics, assembly, calibration, support) is a real cost and speed advantage. It lets the company win custom projects and capture the high-margin aftermarket that competitors who outsource cannot match, and it gives a buyer multiple ways to expand the product line.

How to improve it

Hire or contract a dedicated technical salesperson in the first 90 days. The owner has run this on relationships and repeat orders with no sales function, so a single competent hire calling the existing installed base and adjacent accounts should surface quantifiable pipeline quickly.
Build a formal recurring service and recalibration program with contracts. Right now the aftermarket is transactional; converting the installed base into annual calibration and maintenance agreements would lock in predictable, high-margin revenue and materially raise the resale multiple.
Diversify beyond automotive into adjacent test-and-measurement applications. The skills transfer directly to aerospace, medical device, and general industrial QC, all of which reduce the cyclical exposure that makes this business currently non-recession-resistant.
Fix digital visibility and lead capture. A shop founded in 1988 almost certainly has minimal web presence; a proper site with application case studies and SEO would generate inbound from engineers actively searching for test equipment vendors.
Aggressively document the founder's engineering knowledge before he leaves. Six months of transition plus paid ongoing support is a warning that key IP and application know-how sit in one head; codify designs, specs, and customer histories into systems during the handover window.
Evaluate the real estate decision deliberately. At $1M for a company-owned facility, running the buy-versus-lease math on an SBA 7(a) or 504 structure matters because owning the building can add a rent-free earnings bump but also ties up capital.
Cross-train the 8-person team to remove single points of failure. With such a lean crew, the departure of one machinist or technician could disrupt delivery, so build redundancy in the critical machining and calibration roles early.

Diligence notes

Scrutinize customer concentration hard. A shop this size serving automotive often has a handful of accounts driving most revenue, and losing one OEM or Tier 1 supplier could gut the cash flow, so demand a revenue-by-customer breakdown for the last three to five years.
Break down revenue into new equipment versus aftermarket service and repair. The durability thesis rests on recurring installed-base demand, so verify what percentage of the $1.58M is genuinely repeat service versus one-off custom projects that must be re-won each year.
Quantify founder dependency on engineering and customer relationships. The listing flags that a buyer must lead sales and knowledge transfer and that the seller may stay on for paid engineering, which signals critical technical IP concentrated in the owner; assess how transferable it truly is.
Examine EV and automotive-cycle exposure. Automotive production is cyclical and shifting toward EV, so understand whether the current equipment lines remain relevant as customers retool, and whether 2025 normalized numbers reflect a cyclical peak or trough.
Verify the $516K normalized SDE and the add-backs behind it. A 33% margin is unusually high for a machine shop, so confirm the normalization adjustments are legitimate and that the figure isn't inflated by one-time projects or aggressive owner add-backs.
Clarify the real estate structure and total capital required. The building is 'strongly preferred' at $1M on top of the $1.419M business price; model the full acquisition cost under both purchase and lease scenarios and confirm any lease terms would be arm's length.

Source

Originally listed on BizBuySell. View original listing →