What Is a Machine Shop Worth?

Most machine shops sell for roughly 2.2x to 3.6x Seller's Discretionary Earnings, among the stronger bands in small business, with real estate valued separately if owned. Customer concentration is the single factor most likely to pull a shop below that range.

Included, because the machines produce the earnings the multiple is applied to. Adding equipment value on top of an earnings multiple double counts the same asset. Where equipment matters is in financing: lenders often want a separate machinery appraisal, and strong equipment values can support a larger loan.

Yes, and sometimes substantially. Certification is a barrier to entry. An acquirer who needs aerospace-qualified capacity can buy your certified shop today or spend eighteen months and significant cost certifying their own. That scarcity shows up directly in the offer.

There is no single average, because price tracks earnings rather than revenue. At the midpoint multiple of 2.9x SDE, machine shops at $500,000 of SDE sell around $1,450,000, and at $1,000,000 of SDE around $2,900,000. Typical SDE margin in this category runs near 15% of revenue, so a machine shop doing $1,000,000 in revenue would often carry about $150,000 of SDE and land near $435,000.

Take your Seller's Discretionary Earnings and multiply by 2.2x to 3.6x. Where you land inside that band is decided by owner dependence, customer concentration, recurring revenue and the quality of your books. A machine shop at the top of the range looks materially different from one at the bottom, and most of those differences can be improved in the twelve months before a sale.

SDE multiples of 2.2x to 3.6x apply to owner-operated machine shops. Once earnings pass roughly $1M to $2M of EBITDA the buyer pool shifts to private equity and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x. The two are not comparable: SDE includes the owner's compensation and EBITDA does not, so the same business shows a higher SDE multiple than EBITDA multiple.

Typically 6 to 12 months from going to market to closing, assuming financials are ready. Machine shops usually carry the largest equipment values of any small business we sell, and that changes the financing. A buyer may need machinery appraised separately for the lender, and heavily depreciated CNC equipment with real market value can support borrowing that the earnings alone would not.

There is no formula unique to machine shops. The method is the same one used across small business sales: recast earnings into Seller's Discretionary Earnings, then multiply by the industry band, which for machine shops is 2.2x to 3.6x. Three valuation methods exist in principle. The income approach, applying a multiple to earnings, is what nearly every real transaction uses. The market approach compares against recorded sales of similar businesses and works as a cross-check. The asset approach values equipment and inventory and generally sets a floor rather than a price.

Yes. The calculator on this page applies the same 2.2x to 3.6x band used throughout this guide, adjusted for owner dependence, margin quality and business age. It takes five inputs and returns a market range rather than a single figure, because real transaction prices move with deal structure and buyer type.

A market valuation estimates what a buyer would likely pay and is what you need to decide whether to sell. A formal appraisal is a certified document prepared to a defined standard, and is normally required only for litigation, divorce, estate and tax matters, or an SBA loan on the buyer's side. For planning an exit, a market valuation is the right instrument and is far cheaper.