Buy a Machine Shop in San Jose, CA
The San Jose Machine Shop Market
San Jose sits at the center of one of the densest manufacturing ecosystems in the country.
The aerospace, defense, semiconductor, and medical device industries all need precision machining, and they need it locally. Contract manufacturers in this market often hold long-term purchase orders from household-name OEMs, which creates revenue stability that is genuinely unusual for small businesses.
The flip side: prices reflect that. Median asking price on current listings is $995,000, with deals ranging from $70,000 for a small toolroom operation up to $8.9M for a full-production shop with long-term contracts and specialized CNC equipment.
Labor costs are high here. Skilled machinists in Santa Clara County earn $30 to $45 per hour, and finding them is competitive. Any shop running at capacity with a trained crew is worth paying for.
Deal Economics for a San Jose Machine Shop
At a 3.7x average multiple and $287,000 in median cash flow, the math on a typical San Jose machine shop acquisition looks like this.
Asking price: $995,000. SBA loan (75%): $746,000. Seller note (15%, full standby at 0% interest): $149,000. Buyer cash (5%): approximately $50,000.
Annual debt service on a $746,000 SBA loan at roughly 10.5% over 10 years runs approximately $122,000 per year. Cash flow of $287,000 against $122,000 in debt service puts the DSCR at around 2.35x. That clears our 2x target with room.
The 10% equity injection is structured as 5% buyer cash ($50,000) plus a 5% seller note ($50,000) on full standby acting as equity. The standby note carries 0% interest and no payments during the SBA loan term. Regalis Capital achieves this structure on over 90% of its deals.
These are rough estimates based on market data. Actual terms depend on individual qualification and lender.
The median asking price for a machine shop in San Jose is $995,000 based on current listings. According to Regalis Capital's deal team, most machine shop acquisitions in this market trade between 3x and 4.5x annual cash flow. SBA 7(a) financing requires a 10% equity injection, structured as 5% cash (roughly $50,000) plus a 5% seller note on full standby.
What to Look For in a San Jose Machine Shop
Revenue concentration is the biggest risk in this market. A shop doing $2M in annual revenue where one aerospace OEM accounts for 60% of billings is a fundamentally different risk profile than a shop with 20 customers spread across industries.
Ask for a customer revenue breakdown by year going back at least three years. You want to see concentration coming down over time, or a believable story for why one anchor customer is stable.
Equipment age and condition matters more in machine shops than in almost any other business category. A five-axis CNC machining center runs $300,000 to $500,000 new. If the shop's equipment is 15 years old and not on a maintenance schedule, you are looking at a near-term capital call that does not show up on the P&L.
Ask for maintenance logs, calibration certificates, and a list of all equipment with purchase dates. If the seller cannot produce this, treat it as a yellow flag.
Certifications carry weight here. AS9100 (aerospace), ISO 9001, and ITAR registration open doors that uncertified shops cannot enter. A shop with active certifications commands a premium, but it also commands a more defensible customer base. Know which ones the shop holds and what renewing them requires.
Based on Regalis Capital's analysis of recent acquisitions, machine shops with active AS9100 or ISO 9001 certifications typically trade at 0.5x to 1x higher multiples than non-certified shops in the same market. In San Jose, certifications also signal access to aerospace and defense contracts that provide more predictable revenue than commercial work.
Financing a Machine Shop in San Jose
SBA 7(a) is the right tool for most machine shop acquisitions in this price range. The loan covers goodwill, equipment, working capital, and the real estate component if the shop owns its building.
One structural note specific to this market: many San Jose machine shops operate out of leased industrial space in Alviso, North San Jose, or the Edenvale industrial corridor. If you are buying a business on leasehold premises, the SBA lender will want to see a lease assignment or a new lease with a term that extends at least 2 years beyond the SBA loan maturity. Get this sorted early.
SBA will not finance the full appraised value of equipment if it is old and has low liquidation value. If a shop's balance sheet is heavy on depreciated machinery, the lender may require a larger seller note or additional collateral. Plan for this in the LOI stage, not at closing.
Working capital is often overlooked. Machine shops carry receivables, and the transition period between closing and receiving your first payments can run 45 to 60 days. Build a working capital cushion into the deal structure from the start.
Frequently Asked Questions
How much does it cost to buy a machine shop in San Jose?
Median asking price for machine shops currently on the market in San Jose is $995,000, with a range from roughly $70,000 for small operations up to $8.9M for larger production shops. Most deals trade at 3x to 4.5x annual cash flow, which is inside the SBA 7(a) acquisition sweet spot.
Can I get SBA financing to buy a machine shop in California?
Yes. SBA 7(a) financing is routinely used for machine shop acquisitions in California up to the $5M loan cap. You will need a 10% equity injection, structured as 5% buyer cash and 5% seller note on full standby. Lenders will pay close attention to equipment collateral value and customer concentration before approving.
What cash flow should I expect from a San Jose machine shop?
Median cash flow across current listings is approximately $287,000 per year, though this is typically stated as seller discretionary earnings (SDE), which includes the owner's salary and certain add-backs. Expect a 15% to 30% discount to SDE when modeling what a salaried owner-operator would actually clear after debt service.
What due diligence should I run on a machine shop acquisition?
Key items: three years of tax returns and P&L statements, a full customer revenue breakdown, equipment list with ages and maintenance logs, active certifications (AS9100, ISO 9001, ITAR), lease terms and any landlord consent requirements, and a review of any government or defense contract transferability. Revenue concentration and equipment condition are the two areas where deals most often fall apart.
How long does it take to close a machine shop acquisition in San Jose?
With SBA financing, expect 60 to 90 days from signed LOI to close. More complex deals involving equipment appraisals, lease assignments, or ITAR compliance reviews can push past 90 days. Getting your lender engaged within the first week of having a signed LOI is the single biggest thing you can do to keep the timeline on track.
Talk to Regalis Capital About Buying a San Jose Machine Shop
If you are seriously looking at machine shop acquisitions in San Jose, the deal math works, but the execution details matter more here than in most industries. Equipment condition, customer concentration, and certification status all affect what you should pay and how you structure the deal.
Regalis Capital's team reviews 120 to 150 deals per week across industries including precision manufacturing. If you have a specific shop in mind or want help identifying targets in the Santa Clara County market, start with a free deal assessment.
Frequently Asked Questions
How much does it cost to buy a machine shop in San Jose?
Median asking price for machine shops currently on the market in San Jose is $995,000, with a range from roughly $70,000 for small operations up to $8.9M for larger production shops. Most deals trade at 3x to 4.5x annual cash flow, which is inside the SBA 7(a) acquisition sweet spot.
Can I get SBA financing to buy a machine shop in California?
Yes. SBA 7(a) financing is routinely used for machine shop acquisitions in California up to the $5M loan cap. You will need a 10% equity injection, structured as 5% buyer cash and 5% seller note on full standby. Lenders will pay close attention to equipment collateral value and customer concentration before approving.
What cash flow should I expect from a San Jose machine shop?
Median cash flow across current listings is approximately $287,000 per year, though this is typically stated as seller discretionary earnings (SDE), which includes the owner's salary and certain add-backs. Expect a 15% to 30% discount to SDE when modeling what a salaried owner-operator would actually clear after debt service.
What due diligence should I run on a machine shop acquisition?
Key items: three years of tax returns and P&L statements, a full customer revenue breakdown, equipment list with ages and maintenance logs, active certifications (AS9100, ISO 9001, ITAR), lease terms and any landlord consent requirements, and a review of any government or defense contract transferability. Revenue concentration and equipment condition are the two areas where deals most often fall apart.
How long does it take to close a machine shop acquisition in San Jose?
With SBA financing, expect 60 to 90 days from signed LOI to close. More complex deals involving equipment appraisals, lease assignments, or ITAR compliance reviews can push past 90 days. Getting your lender engaged within the first week of having a signed LOI is the single biggest thing you can do to keep the timeline on track.
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.
Considering a machine shop acquisition in San Jose? Regalis Capital's deal team reviews 120 to 150 deals per week and can help you assess targets in the Santa Clara County market.
Start Your Acquisition