CNC Machining & Precision Parts in Charlotte

A machining company is priced on adjusted EBITDA, not on revenue, and the adjustment is where most of the argument happens. The starting point is the profit the business reports, and then the add-backs: an owner salary above or below what a hired general manager would cost, personal vehicles and travel run through the company, family members on payroll who do not work there, one-time legal or equipment costs that will not repeat, and rent paid to the owner's own property company at something other than market. Each of those is defensible if it is documented and indefensible if it is asserted, which is why the quality of the bookkeeping changes the price before any negotiation starts.

That adjusted number is multiplied. The multiple is set by the things a buyer cannot change in the first year: how concentrated the customer base is, whether the quality system is registered and audited, how old the machine fleet is and how much capacity is left in it, whether there is a management layer between the owner and the floor, and how the workforce is likely to react to a sale. A shop at $2M of adjusted EBITDA with one customer at 45 percent of revenue and an owner who does all the quoting is a very different asset from a shop at the same earnings with a top customer at 18 percent, AS9100 registration, and a plant manager who has been there nine years. Both are real companies in this region. They do not trade at the same multiple.

Working capital is the third lever and the one owners are least prepared for. Nearly every offer in this size range is made on a cash-free, debt-free basis with a normal level of working capital delivered at closing. That means the receivables, inventory, and payables balance the buyer expects to inherit is negotiated as part of the price, and a seller who has been running lean on inventory or aggressive on collections can find the final wire smaller than the headline number. Getting a working-capital target defined early, in writing, is worth more than another point of multiple in most deals.

Almost everything that moves the price on a machining company is fixable, and almost none of it is fixable quickly. The single highest-return project is usually financial: producing accrual-basis statements that tie to tax returns, separating real-estate rent from operating results, and building a clean monthly view of revenue and gross margin by customer. Buyers are not asking for audited financials at this size. They are asking for numbers that survive a quality-of-earnings review, and the difference between statements that do and statements that do not is frequently a full turn of EBITDA.

The second project is reducing dependence on the owner. That means writing down how quoting works, getting the estimating logic into a costed system, moving named customer relationships onto someone else's business card, and giving the plant a manager who will still be there after closing. A buyer who believes the company runs without the seller will pay more and will ask for a shorter transition. A buyer who does not believe it will ask for a long earnout, a large escrow, and a seller note, which are all just ways of paying less until the risk resolves.

The third is documentation of the physical asset. A current machine list with year, hours, control, and maintenance history, an honest schedule of what needs replacing in the next five years, and a maintenance record that shows the equipment has been cared for all remove discounts a buyer would otherwise apply by default. The same goes for the quality system: a registration with a clean audit history is an asset, and a lapsed certificate found in diligence is a price adjustment. None of this is glamorous work and all of it is paid for at closing.