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S2 Ep19: M&A Zing (S2EP19) - Margins & Machines: Buy-Side Breakdown of a 30 year Machining Business
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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
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