Deal Alert: Aerospace & Defense Manufacturing Shop with $4.2M Backlog

📍 Location: Midwest U.S.
💰 Asking Price: $7.5M
💸 2024 Revenue: $1.7M | Cash Flow: ~$338K

🌟 Why This Business is Great:

✔️ Defense-Heavy Backlog
90% of the current $4.2M backlog is tied to defense contracts. That’s essentially guaranteed revenue from a sticky customer base where certifications act as a moat.

✔️ Certifications That Matter
NADCAP, ISO9001, AS9100 — these aren’t just acronyms, they’re real barriers to entry. It can take years for a competitor to achieve the same approvals, which is why primes and Tier 1s keep coming back.

✔️ Underutilized Facility
152,000 sq ft on 13 acres — with only 60% in use. That’s a strategic asset, especially when industrial real estate and buildouts are expensive. Facility alone appraises at $4.9M with replacement cost north of $20M.

✔️ Deep Technical Capability
Precision bonding, PAA, CNC, and finishing services under one roof. That full-service scope is valuable in aerospace, where buyers prefer fewer suppliers they can trust with certified processes.

✔️ Team in Place
30+ staff including engineers and inspectors. Not just a job shop — this is an operation with specialized expertise.

🚧 Challenges & Considerations

❌ High Asking Multiple
$7.5M against ~$338K cash flow = ~22x. Without context, that’s a non-starter.

❌ Defense Concentration
90% of backlog tied to defense = risk. Defense contracts are steady, but concentration makes the business vulnerable to shifts in government spend or contract renewal timing.

❌ Revenue Below Historic Peak
Company once hit $10M+ revenue but is now at $1.7M. Big question: is this a cycle reset or an operator execution problem?

❌ Owner Dependency
Owner is still in the business. Transition risk exists until a clear leadership layer is proven.

🚀 Opportunities I See

🔹 Scale Back to $10M+ Revenue
If historical revenue was north of $10M, capacity and capability exist. Leveraging unused facility space + hiring sales/BD could unlock it again.

🔹 Diversify Into Other Verticals
The processes (bonding, anodizing, CNC) apply beyond aerospace — electronics, semiconductors, automotive. Expanding into new sectors reduces risk and boosts growth.

🔹 Build a Sales & Marketing Engine
There’s currently no sales or marketing function. Even modest effort here could drive new contracts and stabilize revenue.

🔹 Buy Real Assets at Discount
At $7.5M asking, you’re effectively buying $4.9M real estate + $2M equipment + $4.2M backlog. On that math, the operations are priced at close to $0.

🔍 My Analysis:

On the surface, the $7.5M asking price looks high compared to just $338K in cash flow. But when you factor in $4.9M in real estate, $2M in equipment, and a $4.2M backlog, the operations are almost free. The real opportunity here is execution — getting revenue back toward its historical $10M+ peak and diversifying beyond defense. With certifications, staff, and space already in place, a buyer with industry connections and a sales push could turn this into a much bigger business.

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