Custom Optical Component Manufacturer for Sale

Ran across this small business for sale.

At first glance, there is a lot to like.

It reminds me of, my friend, Reg Zeller’s business called CaneKast that is rolling up small-scale non-ferrous foundries.

He’s discovered that small, local foundries are a pretty good business to acquire.

It’s a specialized space with geographic moats, a generational labor shortage, and low capital expenditure requirements.

This deal looks much the same but is in the optical component manufacturing space.

They make custom components for a variety of customers and are based in New England.

This probably means somewhere outside of Boston, Mass.

My gut is that the profit margin is very low compared to what I would expect.

My early hypothesis is that it’s being run like what it says — a Boomer-owned business that hasn’t pushed hard on profits by customer selection, price increases, and efficiency improvements.

That would be something to look at.

75% customer retention (pretty good!) and the large size of the team compared to other manufacturing also stand out.

With any physical product company in America, you run the risk of labor costs and regulatory hurdles being your downfall.

This feels like a subscale business that might be immune to that.

So, some cool stuff to learn in diligence if you pursue this one.

One more thing:

Reg told me that he knew jack squat about foundries before buying one. It cost him money to get up to speed. Now he’s an expert but be sure to build in a buffer if this is a new space for you.

Here is the teaser:

https://dashboard.dealforce.com/deals/profiles/profile64916.pdf

Happy hunting!

Michael