Buy a Machine Shop in Los Angeles, CA
The Los Angeles Machine Shop Market
LA County hosts one of the largest concentrations of precision manufacturing in the country.
The region's aerospace and defense ecosystem, anchored by companies like Boeing, SpaceX, Northrop Grumman, and Raytheon, feeds a deep base of contract machine shops doing CNC milling, turning, and fabrication work. That customer concentration is both the opportunity and the risk.
There are currently 34 listed machine shops across the greater LA market, with asking prices ranging from $69,999 to $8.9M. That spread is wide, and most of the outliers are either asset-only sales at the low end or multi-location shops with long-term contracts at the high end. The median at $995K is the more useful anchor.
LA's median household income sits at $80,366 and the region supports a thick operator class, meaning there is real buyer competition for quality shops. If a machine shop with verified aerospace contracts hits the market cleanly priced, expect multiple offers.
Deal Economics for a $995K Machine Shop
At the median asking price of $995K and median cash flow of roughly $287K, you are looking at a 3.5x multiple. That sits comfortably inside SBA's sweet spot of 3x to 5x.
Here is what a typical deal structure looks like at $995K:
- Asking price: $995,000
- Annual cash flow: $287,000 (median)
- Implied multiple: 3.5x
- SBA 7(a) loan (80%): $796,000
- Seller note (15%, full standby): $149,250
- Buyer cash equity (5%): $49,750
- Total equity injection (10%): $199,000 (5% cash + 5% seller note on standby)
- Approximate annual debt service: ~$103,000 (based on current SBA rates of 10% to 11%, 10-year term)
- Estimated DSCR: ~2.8x
A 2.8x DSCR is well above the 2x target. That leaves meaningful buffer for equipment capital expenditures, which are real in this industry.
These are rough estimates based on market data. Actual terms depend on individual qualification and lender.
According to Regalis Capital's deal team, a median-priced machine shop in Los Angeles ($995K asking, $287K cash flow) produces an estimated DSCR of roughly 2.8x under standard SBA 7(a) financing at current rates. The 10% equity injection is structured as 5% buyer cash ($49,750) plus a 5% seller note on full standby, with no payments during the SBA loan term.
What to Look For in an LA Machine Shop
The due diligence checklist for a machine shop is different from most service businesses. Equipment is the business.
CNC equipment age and condition. Milling centers, lathes, and EDM machines depreciate over time and break expensively. Request full maintenance logs for every major piece of equipment. A shop where the owner deferred maintenance for three years to inflate cash flow is a trap.
Customer concentration. Many LA machine shops generate 40% or more of revenue from one or two aerospace primes. If Boeing pulls a contract, the revenue goes with it. Target shops where no single customer exceeds 25% of revenue, or get a strong contractual carve-out in the purchase agreement.
ITAR and AS9100 certifications. Aerospace and defense work requires these. A certified shop commands a pricing premium and has meaningful barriers to competition. Verify the certifications transfer with ownership.
Operator dependency. If the owner is also the head machinist, programmer, and quality inspector, you have a seller-dependent business, not an acquisition. Confirm that key employees are willing to stay and that institutional knowledge lives in documented processes, not one person's head.
Revenue verifiability. Machine shops often invoice net-30 to net-60. Pull accounts receivable aging, customer contracts, and historical tax returns. SDE figures from brokers typically include owner add-backs that can run 20% to 40% above actual distributable cash flow. Discount accordingly before running debt service math.
Machine shop cash flow figures from broker listings are typically presented as SDE, which includes owner compensation add-backs that overstate actual distributable earnings by 15% to 50%. Regalis Capital's analysis of recent acquisitions shows buyers should apply a conservative discount to broker SDE figures and model debt service against adjusted cash flow, not the headline number.
Why LA Can Work Against You on Price
Labor costs in Los Angeles are among the highest in the US. California's minimum wage and prevailing wage rules, combined with a tight skilled machinist labor pool, compress margins at the operating level.
A shop generating $287K in cash flow in Phoenix would likely generate $220K to $250K on the same revenue in LA after accounting for labor differentials. That compression does not always show up in the asking price because sellers anchor to multiples, not to geography-adjusted earnings.
This does not mean avoid LA machine shops. It means price them right. A 3x to 3.5x multiple on verified, geography-adjusted cash flow is reasonable. Paying 4x to 5x for a shop where the next owner faces 10% to 15% margin compression is a different conversation.
Frequently Asked Questions
How much does it cost to buy a machine shop in Los Angeles?
The median asking price for a machine shop in Los Angeles is $995,000, with listings ranging from under $100K for asset-only sales to $8.9M for multi-location operations with long-term contracts. Most SBA-eligible acquisitions fall in the $500K to $3M range, where deal math works cleanly with standard 10-year SBA 7(a) financing.
What cash flow should I expect from a Los Angeles machine shop?
The median reported cash flow across current LA machine shop listings is approximately $287K annually. That figure is typically presented as SDE by brokers, which includes owner add-backs. Buyers should apply a 15% to 40% discount to broker SDE numbers to model realistic post-acquisition earnings and debt service coverage.
Can I use SBA financing to buy a machine shop in California?
Yes. Machine shops are eligible for SBA 7(a) acquisition financing. The standard structure is 80% SBA loan, 15% seller note on full standby at 0% interest, and 5% buyer cash, totaling a 10% equity injection. At a $995K acquisition price, the buyer cash required is roughly $49,750.
What certifications matter most when buying an LA machine shop?
For shops serving aerospace and defense customers, ITAR registration and AS9100 certification are the two most important credentials to verify. Both require transfer or re-registration with new ownership. Shops with active AS9100 certification typically command a 0.5x to 1x multiple premium over non-certified competitors given the barrier to entry.
How long does it take to close an SBA acquisition of a machine shop?
A typical SBA 7(a) acquisition closes in 60 to 90 days from signed letter of intent, assuming clean financials and a cooperative seller. Machine shop acquisitions can run longer if the equipment appraisal is complex or if the environmental review flags historical machining fluid disposal issues, which is worth checking early in due diligence.
Thinking About Buying an LA Machine Shop?
LA's manufacturing base is real, the deal math at current median prices is workable, and the right shop with verified contracts and a retained workforce is a solid acquisition.
The challenge is filtering the 34 listings down to the 2 or 3 worth serious attention. Regalis Capital's deal team reviews 120 to 150 deals per week and knows what a fundable machine shop acquisition looks like versus a seller fishing for an exit.
If you want a second set of eyes on a specific listing or want to know what is available in the LA market right now, start with a deal assessment.
Frequently Asked Questions
How much does it cost to buy a machine shop in Los Angeles?
The median asking price for a machine shop in Los Angeles is $995,000, with listings ranging from under $100K for asset-only sales to $8.9M for multi-location operations with long-term contracts. Most SBA-eligible acquisitions fall in the $500K to $3M range, where deal math works cleanly with standard 10-year SBA 7(a) financing.
What cash flow should I expect from a Los Angeles machine shop?
The median reported cash flow across current LA machine shop listings is approximately $287K annually. That figure is typically presented as SDE by brokers, which includes owner add-backs. Buyers should apply a 15% to 40% discount to broker SDE numbers to model realistic post-acquisition earnings and debt service coverage.
Can I use SBA financing to buy a machine shop in California?
Yes. Machine shops are eligible for SBA 7(a) acquisition financing. The standard structure is 80% SBA loan, 15% seller note on full standby at 0% interest, and 5% buyer cash, totaling a 10% equity injection. At a $995K acquisition price, the buyer cash required is roughly $49,750.
What certifications matter most when buying an LA machine shop?
For shops serving aerospace and defense customers, ITAR registration and AS9100 certification are the two most important credentials to verify. Both require transfer or re-registration with new ownership. Shops with active AS9100 certification typically command a 0.5x to 1x multiple premium over non-certified competitors given the barrier to entry.
How long does it take to close an SBA acquisition of a machine shop?
A typical SBA 7(a) acquisition closes in 60 to 90 days from signed letter of intent, assuming clean financials and a cooperative seller. Machine shop acquisitions can run longer if the equipment appraisal is complex or if the environmental review flags historical machining fluid disposal issues, which is worth checking early in due diligence.
Note: Deal economics, pricing, and cash flow figures referenced on this page are estimates based on aggregated listing data and general SBA acquisition math. Actual deal terms vary by business, market conditions, and lender requirements. This content is informational only and does not constitute financial advice.
If you want a second set of eyes on a specific listing or want to know what is available in the LA market right now, start with a deal assessment at Regalis Capital.
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