Manufacturing & Industrial · Buyer guide
Buying a Metal Fabrication business
Published · Reviewed by The Diligence Standard Team · Updated
a Metal Fabrication business can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
Project/customer mix, labor hours, material yield, equipment utilization, backlog and quality drive value.
Risks to test
- Owner estimating
- Customer concentration
- Equipment CapEx
- Skilled labor
- Underpriced backlog
- Material volatility
Evidence to request and reconcile
- Job costing
- Backlog
- Customer revenue
- Equipment
- Labor
- Scrap/material data
Decision questions
- Do estimates match actual labor/material?
- What machines need replacement?
- Which customers drive profit?
- Who estimates after owner?
- What backlog margins are supportable?