Pacific Northwest Custom Sheet Metal Fabrication, 50-Year Washington Contractor

$4.0M

Revenue

$927K

SDE

2.8x

Multiple

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Full Editorial Writeup

This is a 50-year-old custom sheet metal fabrication company operating in the Pacific Northwest, doing roughly $4M in revenue with $927K in owner cash flow, a healthy 23% margin for a shop of this size. The business delivers a full-service package under one contract: cutting, forming, welding, assembly, finishing coordination, delivery, and field installation. That vertical integration is the differentiator in a fragmented market where most competitors only do one piece of the job.

The customer mix is genuinely diversified across industrial, architectural, commercial, and government clients, including ports, paper mills, grain elevators, and food-processing facilities. This spread matters because it insulates the shop from any single vertical rolling over. The workforce is unionized with experienced foremen, which is both a quality signal and a labor-cost reality a buyer needs to underwrite carefully.

The asking price of $2.6M includes $1.39M of FF&E and $50K of inventory, with recent investment in modern fabrication equipment that has created spare production capacity. The company has never had a dedicated sales function, relying entirely on repeat business and referrals, which is the clearest lever for a new owner. The seller is retiring and offering modest seller financing of $260K at 9%, a small proof-of-confidence stake rather than a meaningful vendor note.

Why we like it

Earnings quality is strong for the category, with $926,711 of cash flow on $3.99M of revenue, a 23% margin that suggests real pricing power and disciplined project execution. The 2.81x multiple on SDE is reasonable for a specialized fabricator, and the number is anchored by 50 years of operating history rather than a recent spike. The margin durability is the thing to verify, but the headline is attractive.
The moat is the full-service, single-contract model in a fragmented market where most shops only fabricate OR install. Customers pay a premium to have one experienced provider manage a project from specs through field installation, which raises switching costs and reduces price-shopping. Five decades of relationships plus experienced foremen make this hard to replicate quickly.
Customer diversification across industrial, architectural, commercial, and government end markets is a genuine stability asset. Ports, paper mills, grain elevators, and food-processing facilities all have ongoing maintenance and capital needs, and government work adds a countercyclical layer. No single vertical failure sinks the shop.
The operator advantage is obvious: the company has NO dedicated sales function and grows entirely on referrals. A buyer who bolts on structured outbound sales, account development, and digital marketing can fill the recently added production capacity without buying more equipment. That is growth funded by execution rather than capital.

How to improve it

Build a real sales engine in the first 90 days. The business has zero business development function, so hiring one experienced industrial sales rep and installing a basic CRM to work the existing account base for reorders and referrals is the fastest path to filling the new capacity.
Pursue government and infrastructure contracting deliberately. The listing flags government clients and growth markets in data centers, infrastructure, and food processing, so registering for relevant public bid platforms and building a qualification package could open a steady, countercyclical revenue stream.
Analyze utilization of the recently added fabrication equipment. Investment has created spare production capacity, so a buyer should map current machine hours versus available hours and price incremental jobs at contribution margin to convert idle capacity into pure profit.
Formalize project-level costing and margin tracking. A 50-year referral-driven shop often prices on gut and history, so implementing job-cost tracking by project type would reveal which work (fabrication vs. installation vs. finishing) actually drives the margin and where to lean in.
Address key-man and foreman succession before it becomes a risk. Experienced foremen and union tradesmen carry the institutional knowledge, so documenting processes and building a second layer of leadership protects the very quality reputation that justifies premium pricing.
Cross-sell installation and maintenance to fabrication-only clients. Since the differentiator is doing the full scope under one contract, systematically upselling existing customers who currently buy only fabrication into delivery and field installation raises revenue per account.

Diligence notes

Scrutinize the union labor structure and contract terms. The workforce is unionized, so understand wage escalators, pension or multiemployer plan obligations (potential withdrawal liability), and any upcoming collective bargaining that could compress the 23% margin post-close.
Verify revenue concentration and project cyclicality. A fabrication shop can look diversified but still lean on a handful of large industrial or government projects, so pull a customer-by-customer revenue schedule for the last three years to confirm the repeat-business narrative and quantify one-time project spikes.
Confirm the real estate arrangement and its cost. The property is owned and the asking price does not clearly include it, so clarify whether the buyer must lease from the seller, buy separately, or relocate, and model a market-rate rent into cash flow since the $927K figure may not reflect an arm's-length occupancy cost.
Assess the $1.39M FF&E valuation and equipment condition. Since the majority of the purchase price is hard assets, obtain an independent appraisal, verify the recently purchased equipment is owned free and clear, and confirm remaining useful life and maintenance capex needs.
Test how transferable the referral-driven revenue is with the owner leaving. A retiring seller offering only two weeks of training on a relationship-based business is a real risk, so map which customer relationships and foremen actually control the work and negotiate a longer transition or earnout if concentration is high.

Source

Originally listed on BizBuySell. View original listing →