Precision Metal Component Manufacturer, 50-Year Michigan Machine Shop

$3.6M

Revenue

$696K

SDE

3.5x

Multiple

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Full Editorial Writeup

This is a precision metal component manufacturer that has been machining tight tolerance parts in Michigan for more than 50 years. The shop works from customer engineering prints across a wide catalog of part numbers, producing components for demanding applications including Class 8 trucks and military vehicles. The customer base is the kind of book that makes buyers pay attention: transportation OEMs, Tier 1 suppliers, defense procurement programs, and industrial equipment makers, many of whom have been buying for decades.

The operational heart of the business is a fleet of roughly 20 specialized automatic production machines. That equipment is capital intensive, technically demanding to run, and increasingly scarce, which is exactly the kind of barrier that keeps competitors out. Combine that with ISO 9001:2015 certification and the fact that once a part is qualified in an OEM supply chain the customer has high switching costs, and you get durable, sticky revenue rather than a one-off jobbing shop.

The financials are trending the right way. Revenue reached $3.63M in 2025 with $3.70M projected for 2026, and gross margins climbed from 17% in 2023 to 29% in 2025 on the back of a disciplined pricing program. Reported SDE is $695,771 with adjusted EBITDA of $564K. At a $2.4M ask (roughly 3.45x cash flow, though inventory of $650K and FF&E of $450K are included), this is a boring, essential, sticky manufacturing business being sold by a retiring owner with a clean second-shift growth lever attached.

Why we like it

Earnings quality is improving in a way that matters: gross margins nearly doubled from 17% in 2023 to 29% in 2025 on a deliberate pricing program, not a one-time customer win. Cash flow of $695,771 on $3.63M revenue is real for a shop this size, and adjusted EBITDA of $564K shows the improvement is flowing to the bottom line rather than sitting in adjustments.
The moat is genuine and expensive to replicate. Roughly 20 specialized automatic production machines, ISO 9001:2015 certification, and decades of qualified part numbers inside OEM supply chains mean customers face high switching costs once a part is running. Buyers are not paying to re-win these relationships every quarter, which is what durable manufacturing cash flow looks like.
The end markets are defensible: Class 8 trucks, military vehicles, defense procurement programs, and industrial equipment. Defense and replacement-part demand holds up in a downturn far better than discretionary manufacturing, and the reshoring tailwind gives the shop a structural reason to win more work over the next decade.
There is a clean, low-capital growth lever sitting in plain sight. The shop runs one shift, so a second shift could roughly double output on the same equipment and facility with minimal incremental investment. Most manufacturing deals require you to buy machines to grow; here you buy labor and scheduling.

How to improve it

Add a second shift in a phased way starting with the highest-margin, highest-demand part numbers. This is the single biggest lever in the deal and can roughly double throughput on existing equipment, so model the labor cost, supervision, and quality controls needed before committing to a full second shift.
Continue and formalize the pricing discipline that drove margins from 17% to 29%. Audit the remaining part catalog for underpriced legacy jobs, tie quotes to a standard cost model, and build annual price escalators into customer agreements so margin gains stick rather than erode.
Reduce customer concentration risk by pursuing adjacent industries and new OEM qualifications while defense and Class 8 demand is strong. Use the ISO certification and existing relationships as proof points to win first parts in medical, aerospace, or energy equipment segments.
Institutionalize the tribal knowledge before the owner leaves. Document setups, tolerances, and qualification history for key part numbers, cross-train the 13-person team, and build a training pipeline for the specialized machine operators since that skill is scarce and hard to replace.
Pursue the optional real estate purchase or a long-term lease with favorable terms. Controlling the facility protects the second-shift expansion plan and the room for more machines, and it removes landlord risk from a business whose whole thesis depends on capacity flexibility.
Layer in a proactive sales function to capture more wallet share from decades-old customers. These relationships are warm but likely order-driven rather than sold-to, so a light sales and account-management effort could surface new part families and reshoring work already sitting inside the existing base.

Diligence notes

Verify the margin story in detail. Gross margins moving from 17% to 29% in two years is impressive but needs to be tied to actual pricing changes across specific jobs, not mix shift or capitalized labor. Confirm the pricing gains are durable and that no major customer has signaled pushback on renewals.
Map customer concentration and contract terms. Decades-long relationships are a strength, but a shop this size can carry heavy top-account risk. Pull revenue by customer for three years, understand whether relationships sit with the retiring owner personally, and confirm defense/OEM programs are not nearing end-of-life.
Reconcile the two profit figures. The listing shows $695,771 SDE and $564K adjusted EBITDA, and the ask includes $650K of inventory plus $450K of FF&E. Work out what is actually being bought at 3.45x, scrutinize the add-backs, and confirm inventory is current and saleable rather than obsolete work-in-process.
Assess the equipment fleet condition and replacement risk. Roughly 20 automatic machines that are hard to source are a moat, but aging machines carry deferred capex. Inspect maintenance records, remaining useful life, and spare-parts availability, since a single critical machine failure could stall qualified production runs.
Confirm the second-shift assumption is realistic in this labor market. Doubling output depends on hiring and training scarce machine operators. Validate local labor availability, current wage rates, and whether the existing team can supervise a second shift before underwriting the growth case.

Source

Originally listed on BizBuySell. View original listing →