M&A Zing (S2EP19) - Margins & Machines: Buy-Side Breakdown of a 30 year Machining Business
Season 2, Episode 19, Nov 20, 09:41 AM
Share
Subscribe
Gareth and Alfie break down a 30-year precision engineering firm turning ~£2.4m with healthy margins. They unpack why the balance sheet shows lots of cash but not much kit, what that implies for CapEx, how customer concentration should shape deal structure, and where AI, CAD/CAM and cobots create upside. Verdict: a disciplined “yes, with conditions” for the right operator who actually speaks engineering.
Another Buy-Side Breakdown: we unpack a 30-year CNC machining business reporting ~£2.4m turnover and unusually strong margins. This isn’t a fluffy walk-through. We dig into why the balance sheet shows lots of cash but little kit, what that implies for near-term CapEx, how to price customer concentration into the SPA, and where real upside lives with CAD/CAM copilots, cobots and lights-out runs.
What you’ll learn
• How “cash-rich, kit-light” balance sheets happen in precision engineering and how to underwrite CapEx properly
• Simple structure levers for concentration risk (deferral, performance conditions, warranties)
• Where margins come from: materials mix, repeat production, utilisation, and automation that actually pays back
• Operator fit: why engineering fluency beats spreadsheet swagger in this category
• A practical valuation frame for deals like this (illustrative only)
Deal snapshot (from the listing):
Age: ~30 years
Revenue: ~£2.4m
EBITDA: strong (listing cites ~30% adj.)
Watch-outs: low book value of fixed assets, likely customer concentration, retiring owner
Tailwinds: UK reshoring, defence demand, CAD/CAM + cobot ROI
Who this is for:
Searchers, ETA operators, holdco builders, and trade buyers eyeing fragmented UK precision engineering. If you’ve ever asked “Where’s the value in a CNC shop?” this episode answers it.
Timestamps
[00:00] Intro and ECI Awards notes
[01:21] Macro mood: cold weather, hot budget, deal appetite
[03:12] The listing at a glance
[04:06] Cash vs kit: where are the assets?
[05:08] Lease vs aged machines, CapEx reality
[06:09] Materials, sectors, margins
[07:12] High-value runs and lights-out operations
[08:25] CAD/CAM copilots and cobots, ROI in practice
[09:33] Reshoring tailwinds and UK advantages
[11:12] Talent gaps and apprenticeships
[12:21] Who buys this: trade vs searchers
[13:06] Operator fit matters
[13:46] Valuation and structure
[15:01] Diligence priorities
[16:26] Deal-breakers and mitigations
[17:56] Final vote
[18:25] Wrap
Resources & next steps
Diligence checklist (customers, QoE, kit audit, people, automation, compliance, structure) is in the show notes
Got CNC/precision experience? Add your take in the comments so buyers can sanity-check assumptions
Got a spare coat? Give it to someone that needs it: https://wrapupuk.org/
#CNC #PrecisionEngineering #Manufacturing #Reshoring #MergersAndAcquisitions #SearchFunds #ETA #SME #DealFlow #UKBusiness
What you’ll learn
• How “cash-rich, kit-light” balance sheets happen in precision engineering and how to underwrite CapEx properly
• Simple structure levers for concentration risk (deferral, performance conditions, warranties)
• Where margins come from: materials mix, repeat production, utilisation, and automation that actually pays back
• Operator fit: why engineering fluency beats spreadsheet swagger in this category
• A practical valuation frame for deals like this (illustrative only)
Deal snapshot (from the listing):
Age: ~30 years
Revenue: ~£2.4m
EBITDA: strong (listing cites ~30% adj.)
Watch-outs: low book value of fixed assets, likely customer concentration, retiring owner
Tailwinds: UK reshoring, defence demand, CAD/CAM + cobot ROI
Who this is for:
Searchers, ETA operators, holdco builders, and trade buyers eyeing fragmented UK precision engineering. If you’ve ever asked “Where’s the value in a CNC shop?” this episode answers it.
Timestamps
[00:00] Intro and ECI Awards notes
[01:21] Macro mood: cold weather, hot budget, deal appetite
[03:12] The listing at a glance
[04:06] Cash vs kit: where are the assets?
[05:08] Lease vs aged machines, CapEx reality
[06:09] Materials, sectors, margins
[07:12] High-value runs and lights-out operations
[08:25] CAD/CAM copilots and cobots, ROI in practice
[09:33] Reshoring tailwinds and UK advantages
[11:12] Talent gaps and apprenticeships
[12:21] Who buys this: trade vs searchers
[13:06] Operator fit matters
[13:46] Valuation and structure
[15:01] Diligence priorities
[16:26] Deal-breakers and mitigations
[17:56] Final vote
[18:25] Wrap
Resources & next steps
Diligence checklist (customers, QoE, kit audit, people, automation, compliance, structure) is in the show notes
Got CNC/precision experience? Add your take in the comments so buyers can sanity-check assumptions
Got a spare coat? Give it to someone that needs it: https://wrapupuk.org/
#CNC #PrecisionEngineering #Manufacturing #Reshoring #MergersAndAcquisitions #SearchFunds #ETA #SME #DealFlow #UKBusiness