Small owner-run shops sell on SDE (~3.2x); larger associate-run shops on EBITDA (~4.3x). Certifications, customer mix, and your equipment age decide where in the range you land.
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In most small shops the owner is the one who programs the tricky parts, quotes the work, and holds the key customer relationships. A buyer sees a quoting desk and a programming bench that walk out the door with you — key-person risk is the single biggest haircut on an owner-run shop, and it's what keeps you on the SDE basis instead of EBITDA.
Customer and end-market concentration is the risk a buyer can't insure against — if one customer or one sector carries the shop and they leave, the earnings reset. Buyers discount above roughly 25% single-customer revenue, on the order of -0.25x of multiple for every 5 points over, so a 40%-customer shop prices well below a diversified one.
CNC equipment is capital-intensive and book D&A understates true maintenance capex — a buyer normalizes it to a real 3–6% of revenue and assumes a refresh of the worst, oldest spindles in the first year or two. Without a machine-by-machine fleet schedule (age, hours, condition), they assume the worst and take it off your number.
Spot and new-product-introduction job work has to be re-won every order, so a buyer treats it as far less durable than revenue under long-term agreements (LTAs), blanket POs/releases, or repeat part numbers. A shop with no LTA or blanket-release base gets priced toward the floor of its range.
Without AS9100, ISO 13485, ITAR registration, or Nadcap special-process approvals, you can't be a qualified supplier on the aerospace and medical programs that pay the best and stick the longest. A buyer sees a capped end-market and prices the missing qualified-supplier moat as a ceiling on growth.
Each lever is sized for a mid-case associate-run shop (~$5m revenue × ~12–13% ebitda), priced on the ebitda basis — about $650K EBITDA. Same number whether we frame it as “what a buyer discounts” or “what you keep by fixing it.”
AS9100, ISO 13485, ITAR registration, and Nadcap special-process approvals are a qualified-supplier moat — they open the aerospace and medical programs that pay the most and let you bid work uncertified shops can't touch. Advisory sources put certified aerospace/medical shops at 5.5–10x, toward the DealStats p75.
adds about 0.2–0.5× to your multiple · usually takes 12–24 months
Get no single customer above ~25% of revenue, and spread across end-markets so one sector's downturn doesn't reset the shop. Diversification is exactly what moves you from the individual-buyer band toward the consolidator's p75.
adds about 0.2–0.5× to your multiple · usually takes 12–24 months
Revenue under long-term agreements, blanket POs with release schedules, and repeat part numbers is the durable base a buyer pays up for — it's the recurring-revenue analog in a no-contract job shop, and it re-rates the shop above one-off bid work.
adds about 0.1–0.3× to your multiple · usually takes 6–18 months
Modern 5-axis, multi-axis, and Swiss capacity with measured spindle hours signals a shop that can hold tight tolerance and run efficiently. Documented, high utilization is both a margin lever and proof the equipment isn't a deferred-capex liability.
adds about 0.2–0.6× to your multiple · usually takes 6–18 months
Typical impact ranges blended from lower-middle-market transaction data, sub-$50M M&A databases, and observed consolidator pricing in the $300K–$3M EBITDA band. Directional, not a guarantee — your memo computes your actual numbers from your books.
The metrics buyers grade machine shops on. The diagnostic fills the “your business” column from your actual QuickBooks data.
| Metric | Machine Shops & CNC benchmark | Your business | What it means |
|---|---|---|---|
| Recurring / contracted revenue | ~45% of revenue | Your data | Higher is better — the top multiple lever |
| Gross margin | ~30% | Your data | Pricing and job-costing discipline |
| EBITDA margin | ~12% | Your data | What flows to the bottom line |
| Healthy customer-concentration ceiling | top customer under 25% | Your data | Above it, buyers price the risk |
| Typical industry growth | ~5% / yr | Your data | Beating it can add to your multiple |
| Typical sale multiple | 3.1–7.8× EBITDA | Your data | Where the bidding starts; the levers above move you up |
Benchmarks are blended industry composites, service businesses $1M–$10M revenue, 2026-Q1 — directional, not a precise bar. Your memo measures you against your own books. Connect QuickBooks to fill in your numbers →
The diagnostic arrives as formats you can actually use, plus a private, scoped link to share a curated package with a specific buyer — you decide, card by card, what they see.
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Individual and search-fund buyers chase owner-run shops near the SDE median and need the owner replaceable; regional strategics buy to add capacity, capability, or certifications. PE consolidators — Cadrex (CORE Industrial Partners), Precinmac (Centerbridge), Arch Global Precision (The Jordan Company), ADDMAN (American Industrial Partners), Consolidated Machine & Tool (White Wolf) — roll up certified, diversified, LTA-backed shops toward the DealStats p75 (7.76x); the 2026 MW Components → Rosebank ~$950M deal shows platform-scale value. The biggest factor in which buyer and multiple you attract is whether the shop runs without you and survives a concentration test.
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Most Machine Shops & CNC businesses in the $1M–$10M revenue range trade at roughly 3.1× to 7.8× normalized EBITDA, with a typical deal near 4.3×. Smaller, owner-dependent shops sit at the low end; larger, manager-run businesses with recurring revenue reach the top. Your actual number depends on your books — that's what the diagnostic computes, blending recent lower-middle-market closings, main-street marketplace sales, and academic M&A survey data.
It depends on size and basis. Small owner-run shops trade around 3.2x SDE (DealStats 332710, n=209); larger associate-run shops trade around 4.27x EBITDA (n=180), up to roughly 7.8x for certified, diversified shops at the upper quartile. Your certs, customer concentration, recurring-LTA base, and equipment age decide where in that range you land.
It comes down to whether you're still the working programmer/quoter. A working-owner-programmer shop is valued on SDE — the buyer adds your full compensation back, then charges a market production-manager/machinist salary to replace you. Once there's a real management layer (estimators, quality manager, shift leads) and the shop runs without you, it earns the higher EBITDA basis.
Buyers discount above roughly 25% single-customer revenue, on the order of -0.25x of multiple for every 5 points over that line. A shop where one customer is 40% of revenue prices materially below an otherwise-identical shop spread across many customers and end-markets, because the buyer is underwriting the risk that the account leaves.
Yes. AS9100, ISO 13485, ITAR, and Nadcap special-process approvals are a qualified-supplier moat — they open the aerospace and medical programs that pay the most and stick the longest. Advisory sources put certified aerospace/medical shops at 5.5–10x, consistent with the DealStats upper quartile.
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