Precision Machine Shop & Custom Mold-Base Manufacturer, 1985 Elk Grove Village IL

$5.6M

Revenue

$1.9M

SDE

4.0x

Multiple

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Full Editorial Writeup

This is a 40-year-old precision machine shop and custom mold-base manufacturer (NAICS 333511) operating out of a roughly 20,000 square foot facility in Elk Grove Village, a dense manufacturing corridor northwest of Chicago. The company runs an optimized three-shift, four-day schedule and generates about 90% of revenue from engineered-to-order custom mold-base work with the remaining 10% from premium tooling services. On $5.6M of 2025 revenue it produced roughly $1.9M of adjusted EBITDA, a machine-shop margin that is unusually strong and reflects both high-value custom work and recent equipment upgrades.

The standout feature, and the standout risk, is customer concentration: a single multi-billion-dollar publicly traded corporation drives 70% to 90% of sales. The seller frames this as mitigated because the company supplies multiple independent divisions of the parent, each with its own decentralized budget and project lines, and because engineered-to-order mold bases carry high switching costs and client stickiness. Ownership has also invested over $770,000 in 5-axis CNC and wire EDM equipment in the last 24 months, giving a buyer a genuine CapEx holiday on modern iron.

The listing is explicit that this is not for an individual buyer given the concentration and the resulting inability to secure SBA or conventional commercial financing. The two active co-founders are retiring and will provide a structured handover, and the normalized model already funds two full-time managers to replace their roles. Priced at $7.5M, roughly 3.95x EBITDA, this is a strategic or well-capitalized private-buyer deal where the entire thesis lives or dies on the durability of one relationship.

Why we like it

Earnings quality is strong on paper: roughly 34% EBITDA margins on $5.6M of revenue is exceptional for a machine shop, and the 2026 interim figures showing $2.5M net income on a half-year basis suggest real momentum rather than a stale trailing year. The catch is that these margins are inseparable from one customer, so the quality is high but the concentration discounts it.
The moat is real within its niche: engineered-to-order mold bases are customized, spec-locked, and expensive to re-qualify with a new supplier, which produces genuine switching costs across the multiple decentralized divisions this shop serves. Forty years of continuous operation and a multi-decade supplier relationship reinforce that stickiness.
The recent $770,000 in 5-axis CNC and wire EDM investment gives an incoming owner a legitimate CapEx holiday, meaning near-term free cash flow is not going to be eaten by maintenance capital. Buying modern iron already installed and running removes both cost and downtime risk in year one.
The price is disciplined at 3.95x EBITDA, well below where a diversified specialty manufacturer of this margin profile would trade. That discount is the market pricing the concentration risk, which is exactly the arbitrage a strategic buyer who can diversify the book is positioned to capture.

How to improve it

Immediately map the single large customer relationship division by division: identify each purchasing contact, project pipeline, and contract terms, then formalize supply agreements or blanket POs to convert an informal multi-decade relationship into documented, defensible commitments. The concentration is the whole risk, so hardening it is priority one.
Launch a targeted new-customer acquisition effort into adjacent OEMs and mold makers in the Chicagoland manufacturing base, using the freshly installed 5-axis and wire EDM capacity as the pitch. Even shifting concentration from 80% to 60% over 24 months would materially re-rate the business and unlock financing options for a future exit.
Retain and elevate the two full-time managers already funded in the model well before close, so operational continuity does not depend on the retiring founders. Document tribal knowledge on setups, tolerances, and customer-specific specs into written SOPs while the founders are still available.
Push capacity utilization on the three-shift, four-day schedule by quoting additional tooling work, which is currently only 10% of revenue. The equipment is already paid for, so incremental volume drops to the bottom line at high margins.
Institute monthly management reporting with customer-level and division-level revenue tracking, gross margin by job, and machine utilization. Right now the concentration is described qualitatively, and a buyer needs the granular data to manage the risk and spot erosion early.
Explore vertical or geographic expansion by acquiring or partnering with a complementary tooling or precision-machining shop to add customers and cross-sell capacity. A roll-up path is the cleanest way to dilute concentration while spreading fixed overhead across more revenue.

Diligence notes

The entire deal hinges on the single customer at 70% to 90% of sales, so obtain a written breakdown of revenue by division and by year, contract or PO terms, contract length, and any recent RFP or re-sourcing activity. Understand how decentralized the purchasing truly is and whether a single procurement decision at the parent could unwind multiple divisions at once.
Reconcile the aggressive 2026 interim figures ($2.5M net income and $2.48M adjusted EBITDA for a half-year) against 2025 full-year results, and confirm whether this reflects durable demand or a one-time surge in orders. Verify the adjustments to EBITDA and SDE line by line, since the spread between reported and adjusted numbers is where machine-shop deals get overstated.
Validate the CapEx claim: confirm the $770,000 in 5-axis CNC and wire EDM was actually spent in the last 24 months, that the equipment is owned free and clear versus leased or financed, and assess remaining useful life and any deferred maintenance the CapEx holiday narrative might be masking.
Confirm the founders' actual day-to-day roles and whether two hired managers can genuinely replace them, especially on engineering, customer relationships, and quoting. The listing already flags the need for two full-time hires, so scrutinize whether the customer relationship is personal to the founders or institutional to the company.
Pressure-test the financing structure given the listing's own statement that the business cannot obtain SBA or conventional commercial funding due to concentration. Model the deal on the assumption of seller financing, an earn-out tied to customer retention, or all-equity, and negotiate a holdback contingent on the key customer's revenue persisting post-close.

Source

Originally listed on BizBuySell. View original listing →