$5.7M
$1.1M
5.3x
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An established precision machining and custom tooling operation in Michigan is now available for acquisition. The company specializes in complex, high-tolerance manufacturing work for demanding end...
Why we like it
- Earnings quality looks solid at $1.115M in cash flow, and aerospace and defense machining tends to carry better margins than commodity automotive job-shop work because of the tolerance and certification requirements. The buyer should confirm whether this cash flow is owner SDE or true EBITDA, because the 5.31x multiple reads very differently depending on which.
- The moat here is real but specific: aerospace and defense work requires customer approvals, quality certifications, and a skilled workforce that takes years to build. Approved-supplier status on a defense program is sticky revenue that competitors cannot easily underbid, and the skilled team in place is the single hardest asset to replicate in this trade.
- Defense demand is structurally non-discretionary and backed by multi-year appropriations, so this business should hold up far better in a downturn than a typical contract manufacturer exposed to consumer or automotive cycles. That recession resilience is exactly why a 5x multiple can be defensible rather than rich.
- The Macomb County location sits in a deep pool of machining talent and tier-one supply relationships, which helps with both labor recruiting and customer proximity. A buyer with operational chops in manufacturing can use that ecosystem to add capacity and win adjacent programs.
How to improve it
- Lock in the skilled team before anything else. Within the first 90 days, put retention agreements, stay bonuses, or equity-lite incentives in front of the lead machinists and programmers, because in this trade the team walking out the door is the fastest way to destroy the very thing you paid a premium for.
- Audit and pursue certifications that unlock higher-margin work. If the shop is not already AS9100 or ITAR-registered, getting those credentials expands the addressable defense and aerospace program list and justifies premium pricing on future bids.
- Map customer concentration and diversify deliberately. If one or two defense primes drive most of the revenue, build a structured outreach plan to add two or three new approved-supplier relationships over the first year to de-risk the book.
- Squeeze machine utilization with scheduling and a second shift. Precision shops often run equipment well under capacity; adding a night shift or tightening job sequencing can lift throughput on the existing asset base without new capital.
- Implement basic shop-floor data capture if it is not already in place. Real-time tracking of setup times, scrap rates, and machine hours surfaces the margin leaks that are invisible on a P&L and is the highest-ROI operational change in most job shops.
- Review pricing on legacy contracts. Long-tenured aerospace and defense parts are frequently priced at old quotes that never got reset for material and labor inflation, so a disciplined repricing on renewals can drop straight to the bottom line.
- Build a documented quoting and estimating process. If quoting lives in the owner's head, formalize it so the business can scale bid volume and survive the owner's exit without losing win rates or under-pricing complex jobs.
Diligence notes
- Clarify whether the $1.115M is SDE or EBITDA and get three to five years of tax returns and financials. At a 5.31x multiple the distinction is the whole deal, and you need to confirm the earnings are clean and not propped by one-time defense program spikes.
- Dig into customer and program concentration. Pull a revenue-by-customer breakdown and the status of every active contract and approved-supplier qualification, because defense work that is tied to a single program nearing end-of-life is a very different asset than a diversified, recurring book.
- Verify the certifications and the workforce. Confirm AS9100, ITAR, and any customer-specific approvals are current and transferable, and get the full roster with tenure, age, and skill level to assess key-person risk among the machinists and programmers.
- Inspect the equipment condition and ownership. Confirm the machine tools included in the sale are owned free and clear, get a maintenance history, and have an independent appraisal, because deferred maintenance on aging CNC equipment is a hidden capex bomb.
- Understand the real estate arrangement. The listing does not mention property in the price, so confirm whether the facility is leased and on what terms, since a short or below-market lease could force a relocation that disrupts the workforce and certifications.