Three ways to value a shop (use all three)
- SDE multiple — owner-operated shops, typically under ~$1.5M revenue.
- EBITDA multiple — shops that can hire a replacement GM and still cash-flow.
- Asset floor — equipment FMV + inventory − interest-bearing liabilities.
SDE = profit after job costs and overhead + owner perks + interest + depreciation + one-time items. EBITDA then subtracts a replacement owner salary. If you skip that salary, you are selling a job, not a company.
Profitability context: Is a CNC business profitable? covers margins and utilization. This page converts those earnings into a bid.
2026 machine shop valuation multiples
| Shop type | SDE multiple | EBITDA multiple | What has to be true |
|---|---|---|---|
| 1–2 machine job shop, owner on the control | 2.0–2.8× | 3.2–4.0× | Book transfers; buyer can quote |
| 3–5 machine professional shop | 2.6–3.5× | 4.0–5.2× | Foreman or programmer stays |
| Production / repeat parts | 2.8–4.0× | 4.5–6.0× | POs and process docs exist |
| Aerospace / medical / defense specialty | 3.5–5.0× | 5.0–6.5× | Certs and contracts assignable |
| Distressed, empty book, ancient iron | 1.4–2.2× | Asset deal | Buyer is shopping machines, not a company |
Multiples move more from risk than from last year’s top-line. Our calculator starts in the middle of these bands and then adjusts for utilization, customer concentration, machine age, and recurring revenue.
Walked example: $1.2M revenue job shop
Assumptions: custom/job-shop mix, 68% utilization, top customer 22%, average machine age 8 years.
- Revenue $1,200,000
- Job costs $480,000 (40% COGS)
- Overhead excluding owner $320,000
- Owner perks $24,000, depreciation $85,000, interest $18,000, one-time $12,000
- Replacement GM salary $140,000
- Equipment FMV $420,000, inventory $65,000, liabilities $90,000
SDE = 1,200,000 − 480,000 − 320,000 + 24,000 + 85,000 + 18,000 + 12,000 = $539,000 (45% of revenue—hot, but possible with low owner-burdened overhead). Normalized EBITDA = 539,000 − 140,000 = $399,000. Job-shop base ~2.4× SDE. With this risk profile the calculator lands near 2.4× SDE ≈ $1.29M and ~3.6× EBITDA ≈ $1.44M. Asset floor = 420k + 65k − 90k = $395,000. Suggested value hugs the earnings blend, not the iron, because the book is doing the work.
Cut utilization to 50% and put one customer at 48% and that multiple drops hard. Same iron, worse company.
What moves the multiple
- Utilization under 55% — unused capacity or a weak book. Discount.
- Top customer over 40% — deal killer in diligence unless contracted.
- CNCs older than 15 years without rebuilds — buyer is buying a capex plan.
- Recurring / blanket POs over 40% — this is what production multiples are paid for.
- Owner is the only estimator — holdback or earnout, not a full multiple.
Run the calculator on your numbers
Defaults match the $1.2M example. Change the sliders and watch SDE, EBITDA, and the asset floor move.
Machine Shop Valuation Calculator
Model SDE, EBITDA, and an asset-based floor the way buyers and brokers actually price shops.
Estimated shop value
Enter shop financials to see valuation ranges.
Buying vs starting vs financing the iron
Buying a shop is often cheaper than starting from a cold building once you count two years of empty spindle time. Financing the machines inside a purchase is a separate credit from buying the equity. Manufacturing calculators, machinery loan, and equipment ROI belong on the same worksheet as this valuation.