How R&S Machining Sold at 7.5x EBITDA — And What Every Precision Manufacturer Should Take From It
We recently completed the sale of R&S Machining, a St. Louis-based precision manufacturer serving aerospace and defense OEMs, to Threadlock Precision, a D.E. Shaw-backed platform building a scaled A&D machining network.
We're sharing the story behind this deal because, frankly, it didn't start clean. And if you own a precision manufacturing business, what we navigated will sound familiar.
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Where things stood at the outset.
R&S had built an outstanding operation over three decades: complex high-tolerance components, large-format gantry machining, Swiss turning, integrated assembly work — the kind of capabilities that are genuinely hard to replicate. Their reputation on the floor was excellent. Their programs were mission-critical.
But like a lot of founder-built shops, the business carried complexities that give buyers pause. There were ownership structure questions that needed to be resolved before any transaction could move forward. The balance sheet was carrying debt that constrained growth. Customer concentration risk was real. Institutional knowledge lived in people's heads rather than in documented processes. And the question every buyer eventually asks — what happens to this business if the founder steps away? — didn't have a clear answer.
Then a major customer issued stop-work orders that sent inventory ballooning. For a business preparing to go to market, that's the kind of event that can crater a process. Suddenly your working capital story looks ugly, your margins look compressed, and every buyer in the room is recalculating their offer downward.
None of this is unusual. We see some version of it in almost every precision manufacturing business we work with. The difference is whether you have someone in your corner who knows how to get ahead of these issues — or whether you let a buyer use them against you at the negotiating table.
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What we did about it.
Before we ever took R&S to market, we helped the ownership team restructure the business to make it presentable — and more than presentable, compelling.
We worked through the ownership structure, designing a path that resolved those questions cleanly so they wouldn't become diligence issues that spooked buyers or created closing risk. We helped the company access credit to support growth, working with banks and capital partners to put the balance sheet in a position of strength rather than constraint. And when the stop-work orders hit, we helped the team frame the inventory situation for what it actually was: a timing issue on programs with long-cycle visibility, not a structural problem with the business.
Beyond the firefighting, we built a clear narrative around the depth and defensibility of R&S's capabilities. We quantified the switching costs embedded in their customer relationships. We identified where the business had real runway — where a buyer with capital and operational resources could accelerate growth that the current ownership structure couldn't fully capture on its own.
The goal was to walk into every buyer conversation with a thesis, not just a set of financials. Here's what this business does that's hard to replicate. Here's why the customer relationships are durable. Here's the growth a new owner unlocks.
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How it ended.
R&S Machining sold at north of 7.5x EBITDA — a multiple that meaningfully exceeded what most owners in this sector assume is achievable, and one that far surpassed initial expectations when the engagement began.
The owner completed the transaction in a strong financial position, with a deal structured to deliver generational wealth for his family. Threadlock Precision, backed by D.E. Shaw, selected R&S specifically for its large-format machining depth and engineered assembly capabilities — their third acquisition as they build a national A&D precision manufacturing platform. They paid a premium because we gave them the confidence to.
That outcome didn't happen in spite of the complexity. It happened because every issue — the ownership structure, the balance sheet, the customer disruption — was identified and addressed before a buyer ever had the chance to use it as leverage.
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Why this matters to you.
If you own a precision manufacturing business with aerospace, defense, or industrial exposure, you are operating in the most favorable seller's market this sector has seen. PE-backed platforms are competing aggressively for differentiated capabilities. Defense spending tailwinds are real and durable. And the fragmented nature of the CNC and engineered components landscape means acquirers need to buy what they can't build fast enough organically.
But here's what we've learned across dozens of these transactions: the multiple you achieve has less to do with your trailing EBITDA than most owners think. It has everything to do with how your business presents on a handful of dimensions that buyers scrutinize closely — and whether you've addressed the risks before they become someone else's negotiating leverage:
• Can the business operate and grow without the founder in the chair every day?
• Is your ownership structure clean, or are there questions that need to be resolved first?
• Is institutional knowledge documented, or does it walk out the door at 5pm?
• Are customer relationships held at the company level or the personal level?
• Is your balance sheet positioned for growth, or is debt quietly constraining what the business could become?
• Have you deferred investments in equipment, systems, or people that a buyer will discount dollar-for-dollar?
• If a major customer disruption hit tomorrow, could you frame that story — or would it frame you?
Most owners know these issues exist. The ones who get premium outcomes are the ones who address them 12 to 18 months before they ever talk to a buyer.
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What we'd suggest.
We're not writing to pitch you on selling your business. You'll make that decision on your own timeline.
What we would suggest is a confidential conversation about where your business sits today on the dimensions that actually drive multiples. Not a formal valuation — something more practical. A clear-eyed look at what's working, what a buyer would flag, and what you can do now to widen the gap between a market-average exit and an exceptional one.
That conversation costs you nothing and commits you to nothing. But for the owners who've had it with us, it tends to be the most valuable hour they spend all year.
Andrew Southwell, CFA, is Managing Director at SSK Capital, a boutique M&A advisory firm focused on aerospace and defense. Sources: PitchBook Q3 and Q4 2025 A&D Reports, PCE Investment Bankers Q2 2025, PrivSource, Business Wire, and SSK Capital transaction records.