What is the EBITDA valuation multiple for a machine shop?

Precision machine shops are valued on earnings times a market multiple, with the value of the equipment factored in. Established, professionally managed shops are valued on EBITDA at about 5.0x-9.0x, while smaller owner-operated shops are valued on SDE at roughly 3.0x-6.0x. Because these businesses are capital-intensive, buyers look closely at the age and condition of the CNC equipment alongside the earnings.

Customer concentration is usually the biggest swing factor: a shop where one or two customers drive most revenue is riskier and trades lower, while a diversified base across resilient end markets (aerospace, medical, defense) supports the high end. Quality certifications such as ISO 9001 or AS9100, long-term supply agreements, modern and well-maintained CNC machines, documented processes, and a skilled workforce that will stay all push the multiple up; aging equipment and a thin, owner-dependent team pull it down.

Buyer type sets the ceiling: an individual buyer typically pays an SDE multiple with SBA financing, while strategic manufacturers and PE-backed platforms pay EBITDA multiples and often 60%-80% cash at close with the balance as equity rollover or an earnout. DealSeam is not a traditional business broker; where there's a fit, it introduces owners to qualified buyers, with the buyer paying the success fee.