Confidential — Acquisition Brief
The Deal Sheet · Feb 2026
Business-Level Analysis — Deal #109
Inglewood Industrial Coatings Shop with Real Estate: $1.35M Ask, 40-Year Aerospace Finisher
Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.
View Original Listing ↗ Conditional Real estate (~$1.0M) limits downside. SDE is undisclosed and inconsistent ($100K/$143K/$230K), and 7(a) DSCR is below 1.0x. Pursue only with verified financials, a clean Phase I/II, and a split-loan structure.
Est. $1.0M
2024 Revenue (not disclosed)
Est. $190K
Est. SDE (Reported: $100K 2025)
2.0x–3.0x OpCo SDE + RE
Est. Fair Multiple
$1.10M–$1.35M
Est. Fair Value
01 — Business Overview
At a Glance
Hytech Processing (est. 1984) offers liquid and powder coating, EMI shielding, masking, and silkscreen. It is ISO 9001:2015 certified, holds SCAQMD permits, and owns a 4,953 sf building near LAX. Raytheon is a client.
5.0
Revenue Quality
Diversified commercial + residential mix with strong recurring base
6.0
Market Position
Las Vegas: extreme heat demand, population boom, construction surge
3.0
Information Quality
Limited public data — full financials behind NDA; requires verification
Key Strengths
- Owned 4,953 sf freestanding industrial building (seller value $1.0M) included; covers ~74% of ask
- SCAQMD-permitted booths and oven owned free and clear; permits are a real barrier to entry
- ISO 9001:2015 plus an existing Raytheon relationship; aerospace/defense work is sticky
- EMI shielding, precision masking, and silkscreen are specialty niches that pure powder shops can't offer
- 40+ years of operation in the dense South Bay aerospace/defense corridor
Key Questions
- Which SDE figure is correct for 2025: $100K or $143K? Reconcile it to tax returns.
- What is the basis for the 2026 projection of $230K? Is it backed by signed POs or backlog?
- What is gross revenue for 2023–2025? What share comes from Raytheon?
- Does the business pay rent to the seller's real estate entity? If so, what is the amount?
- How many employees are there, who holds the key roles (QA, lead coater), and will they stay?
- Has any environmental assessment been done? What is the history of solvent, chromate, and metal use?
- Does the shop hold ITAR registration or NADCAP? What do the Raytheon supplier approval terms require?
- Why is the owner selling, and what transition period will the owner commit to?
02 — Financial Analysis
Reconstructed P&L
Estimated Income Statement
| Line Item | Amount | % Revenue | Benchmark |
|---|---|---|---|
| COGS (Materials) | –$550,000 | 55.0% | Industry avg: 55.0% |
| Direct Labor | –$260,000 | 26.0% | Industry avg: 26.0% |
| Gross Profit | $190,000 | 19.0% | Calculated |
| Vehicle / Fleet | –$30,000 | 3.0% | Industry range: 2-5% |
| Insurance (GL, WC, Auto) | –$25,000 | 2.5% | Industry range: 2-4% |
| Office / Admin / Software | –$20,000 | 2.0% | Industry range: 1-3% |
| Marketing | –$10,000 | 1.0% | Industry range: 0.5-3% |
| Rent / Facilities | –$20,000 | 2.0% | Industry range: 1-4% |
| Other Overhead | –$15,000 | 1.5% | Industry range: 1-3% |
| Depreciation | –$4,000 | 0.4% | Industry range: 0.3-0.5% |
| EBITDA (Est.) | $70,000 | 7.0% | Benchmark: 15–20% healthy |
| Estimated SDE | ~$190,000 | 19.0% |
SBA Financing Model
Estimated SDE of ~$190,000 can support SBA 7(a) debt service on a $1,349,000 acquisition. Assuming 10% down ($134,900) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $196,589. Estimated pre-tax income to owner: ~–$6,589+ after debt service.
03 — Working Capital & Seasonality
Cash Flow Reality Check
Est. $150,000
Est. Working Capital Needed
Est. $210,000 (Apr–May AR peak plus powder inventory)
Peak Capital Requirement
Low
Seasonality Risk
Monthly Revenue Seasonality (1.0 = Average Month)
Jan
0.84x
Feb
0.90x
Mar
1.08x
Apr
1.14x
May
1.14x
Jun
1.08x
Jul
0.96x
Aug
0.96x
Sep
1.08x
Oct
1.08x
Nov
0.96x
Dec
0.78x
Cash Conversion Cycle
Days Receivable
45 days
Days Payable
32 days
Net Cash Cycle
13 days
Assessment
Normal range
Working Capital Recommendations
- Fund WC at Close: Include $150K of working capital in the SBA loan or require a seller-delivered AR/inventory peg. It is not in the $1.349M ask.
- Revolving Line: Secure a $75K revolver to cover the Apr–May peak ($210K) and December trough without straining cash.
- Defense AR Discipline: Prime payment terms can stretch past net-45. Use e-invoicing portals and track DSO weekly.
04 — Revenue Quality
How Sticky Is the Revenue?
Revenue Breakdown by Type
Aerospace/defense coating & EMI shielding (blanket POs) (Recurring) 35%
Industrial/electronics OEM job work (Repeat) 35%
Silkscreen & part marking (Repeat) 15%
Architectural/walk-in coating (One-Time) 15%
Customer Concentration (Est.)
Top 1 Customer
~25%
Top 5 Customers
~55%
Top 10 Customers
~72%
Concentration Risk: High — Raytheon is likely the top account. Loss or requalification failure could cut Est. SDE by more than half given 19% gross margin.
Revenue Retention Estimate: Est. 85–90% annual retention. Aerospace specs, approvals, and ISO qualification create switching costs, though one-off architectural work churns.
Estimated percentage of revenue retained after an ownership transition, based on industry benchmarks and business characteristics.
Churn Risk Factors
Raytheon requalification after the ownership change (Medium likelihood)
Mitigation: Engage supplier quality pre-close; condition the earnout on retention
Loss of key coater, masker, or QA staff (Medium likelihood)
Mitigation: Retention bonuses and employment agreements signed at close
Seller-held relationships leave with the owner (High likelihood)
Mitigation: 6–12 month paid transition; joint customer visits
Defense or tariff-driven manufacturing slowdown (Low likelihood)
Mitigation: Diversify into architectural and fabricator accounts
03 — Valuation Assessment
What's This Business Worth?
Valuation Triangulation
| Method | Low | Mid | High |
|---|---|---|---|
| Sum-of-parts, Est. SDE: RE $0.9–1.1M + OpCo SDE $119K × 2.0–3.0x (Est. $190K less Est. $71K market rent) | $1,138,000 | $1,298,000 | $1,457,000 |
| Sum-of-parts, reported SDE: RE $0.9–1.1M + $100K × 2.0–3.0x (assumes rent already burdened) | $1,100,000 | $1,250,000 | $1,400,000 |
| Revenue multiple: Est. $1.0M × 0.35–0.55x + RE $0.9–1.1M | $1,250,000 | $1,450,000 | $1,650,000 |
| Asset-based: RE $0.9–1.1M + Est. equipment at 50–80% of cost ($75–150K) | $975,000 | $1,100,000 | $1,250,000 |
Blended Fair Value
$1.10M–$1.35M (mid ~$1.25M). The $1.349M ask sits at the top of the range.
Premium Factors
Owned industrial real estate in a 5%-vacancy market
8%
SCAQMD permits and ISO 9001:2015
7%
Aerospace/defense client base (Raytheon)
7%
40+ year operating history
6%
Discount Factors
Revenue undisclosed; three conflicting SDE figures
9%
Legacy environmental risk at a 40-year finishing site
8%
Likely high customer concentration (top 1 ~25%)
7%
No employee, owner-role, or sale-reason disclosure
7%
Liquid coating exposure to tightening Rule 1107
5%
04 — Market Context
Market & Comparable Transactions
LA County industrial vacancy is ~5% with NNN rents ~$1.19/sf/mo. The South Bay aerospace/defense base and Inglewood stadium-district construction support demand. Small shops typically run $170K–$800K in revenue.
| Comparable | Revenue | Multiple | Location |
|---|---|---|---|
| Industrial powder coating job shop, AQMD-permitted, 5-person crew, leased space | $660K (2025) | ~2.3x SDE ($129K); ~0.45x revenue; asking $299K | Orange County, CA |
| Specialized Coatings: powder and ceramic coating, founded 2001 | ~$800K | ~2.3x SDE ($192K); ~0.56x revenue; asking $450K | Huntington Beach, CA |
| Powder coating and fabrication shop with repeat municipal work (parking meters) | Not disclosed | ~2.75x cash flow ($107K); asking $295K | Southern California |
| Small light-manufacturing powder coater | $168.5K | Best offer on $44.4K cash flow | Los Angeles, CA |
| ISO 9001 powder coating and fabrication shop with blue-chip customers | Not disclosed (EBITDA $600K) | 4–6x EBITDA (rule of thumb) | California |
| 'Premier Powder Coat Business' (Murphy). Services match; possibly the same target. | Not disclosed | Asking $1.95M; earnings undisclosed | Los Angeles County, CA |
Bull Case
Verified SDE is $190K+ and the 2026 projection of $230K holds on Raytheon volume. The buyer gets a ~$1.0M building, permits, and an ISO platform for ~$300K of goodwill, then adds powder and architectural work.
Bear Case
True SDE is ~$100K before market rent, a Phase II finds contamination, or Raytheon requalifies away. The buyer then owns a costly building with a marginal business and negative cash after debt.
06 — Competitive Landscape
Who You're Up Against
25-35
Est. Local Competitors
Fragmented
Market Structure
Less than 5%
Franchise Penetration
Key Local Competitors
| Company | Type | Est. Revenue | Threat Level |
|---|---|---|---|
| Beach Cities Powder Coating | Independent | Est. $7M (unverified) | High: Gardena regional player, 4.6 stars (118 reviews), sandblasting |
| Freedom Powder Coating | Independent | Est. $2–3M | Medium: 4.7 stars, custom coating plus blasting in Florence-Firestone |
| Victory Powder Coating & Sandblasting Inc. | Independent | Est. $1–2M | Medium: South Park, 5.0 stars, integrated blasting |
| Target Precision Powder Coating | Independent | Est. $1–2M | Medium: precision niche on S. Normandie, 5.0 stars |
| Powder Coating Unlimited | Independent | Est. $1–3M | Low: North Hollywood, 4.6 stars (145 reviews), regional jobs |
Competitive Advantages
Aerospace/defense qualification (Raytheon) and EMI shielding
Strong
ISO 9001:2015 certification
Strong
SCAQMD permits for both liquid and powder lines
Strong
Owned, coating-zoned facility near LAX
Moderate
Silkscreen and precision masking under one roof
Moderate
40-year customer relationships
Moderate
Moat Assessment
Moderate. Most nearby rivals are consumer and architectural powder shops. The target's ISO, aerospace, and EMI niche plus AQMD permits and zoned space are real barriers, but the moat depends on retaining customers and staff.
05 — Risk Assessment
Risk Scores & Due Diligence
5.5
Market Risk
Medium — HVAC is essential in Las Vegas
3.0
Operational Risk
High — Labor + owner dependency unknown
3.0
Financial Risk
High — Estimated financials only
Due Diligence Priorities
- 1. Quality of Earnings: Obtain 3 years of tax returns, P&Ls, and bank statements. Reconcile the $100K, $143K, and $230K SDE figures, and isolate rent paid to the seller's RE entity.
- 2. Environmental (Phase I/II ESA): 40 years of solvent, metal, and EMI coating use. Phase I is mandatory; budget for Phase II soil and vapor testing. Treat findings as a walk-away trigger.
- 3. Customer Concentration & Raytheon: Get revenue by customer for 3 years, Raytheon supplier status, POs, quality agreements, and change-of-ownership requirements.
- 4. Permits & Certifications: Confirm SCAQMD permit transfer, ISO registrar transfer, ITAR/DDTC status, CUPA/hazmat plan, and Rule 1107 compliance for liquid lines.
- 5. Real Estate: Get an independent MAI appraisal, a zoning and conforming-use check for coating, a building inspection, and a title review. Model Prop 13 reassessment (~1.1% of price).
- 6. People: Get a census, wages, and tenure. Identify the lead coater, masker, and QA manager, and secure retention agreements before close.
08 — Transfer Checklist
What Needs to Transfer
Est. $60K–$120K one-time
Total Estimated Transfer Cost
Est. $60K–$120K one-time (incl. ESA, ISO, permits, retention; excl. QoE, appraisal, insurance premiums)
90–120 days
Estimated Time to Complete
Deal Transfer Checklist
✓
License SCAQMD Permits to Operate (booths, oven) Critical
Cost: Est. $1K–$5K Time: 30–90 days Change-of-ownership filing required; confirm no open NOVs
✗
License City of Inglewood business license
Cost: Est. $500 Time: 2–4 weeks New license in the buyer entity
✗
License CUPA hazmat business plan / EPA ID Critical
Cost: Est. $1K–$3K Time: 30 days New generator ID and HMBP filing
✗
Insurance GL/products liability (aerospace) Critical
Cost: Est. $20K–$35K/yr Time: 2–4 weeks Primes require specific limits and additional-insured status
✗
Insurance Workers' comp (metal finishing) Critical
Cost: Est. $15K–$30K/yr Time: 2–3 weeks High CA class rates; mod rate resets
✗
Insurance Pollution/environmental liability Critical
Cost: Est. $5K–$15K/yr Time: 3–6 weeks Seek prior-acts coverage; tie to Phase I results
✗
Contract Raytheon supplier approval and POs Critical
Cost: Est. $0–$10K Time: 60–120 days Requires notification and possible re-audit
✓
Contract Customer quality agreements and open POs Critical
Cost: Legal est. $2K–$5K Time: 30–60 days Assignment consent may be needed
✓
Regulatory ISO 9001:2015 certificate Critical
Cost: Est. $5K–$10K Time: 60–90 days Registrar transfer and surveillance audit
✗
Regulatory ITAR/DDTC registration (if applicable) Critical
Cost: Est. $3.5K/yr Time: 60 days Confirm whether defense parts are ITAR-controlled
✗
Regulatory Phase I/II ESA and zoning conformance Critical
Cost: Est. $4K Phase I; $15K–$40K Phase II Time: 30–60 days Required by the SBA lender; potential deal-breaker
✓
Operational Equipment title / UCC lien search
Cost: Est. $500 Time: 1–2 weeks Verify the 'free and clear' claim
✗
Operational Key employee retention and seller transition Critical
Cost: Est. $20K–$40K Time: 6–12 months Retention bonuses plus paid seller consulting
Potential Deal Breakers
- Phase II reveals material soil or vapor contamination
- SCAQMD permits cannot transfer or have unresolved violations
- Raytheon declines to requalify the new owner
- Tax returns cannot support at least $100K SDE
- Coating use is nonconforming under Inglewood zoning
06 — Post-Acquisition Plan
100-Day Integration Playbook
Phase 1 (0–90 days)
Stabilize & Retain
Protect customers, permits, and staff during the ownership change.
- Execute key-employee retention bonuses
- Meet Raytheon supplier quality; complete requalification
- File SCAQMD and CUPA change-of-ownership filings
- Run a seller-led introduction tour with the top 10 customers
Phase 2 (3–12 months)
Optimize Operations
Improve margins and reduce regulatory exposure.
- Shift liquid volume to powder where specs allow (Rule 1107)
- Reprice low-margin jobs; set rush-turnaround premiums
- Implement job costing and on-time delivery tracking
- Tighten AR from Est. 45 to 35 days
Phase 3 (12–36 months)
Grow & Diversify
Reduce concentration and use the ISO platform to win new work.
- Pursue NADCAP or primes beyond Raytheon in El Segundo and Hawthorne
- Target architectural metal tied to stadium and facade grants
- Add net-30 accounts with local fabricators
- Evaluate a tuck-in of a smaller powder shop
Value Creation Waterfall (3-Year Outlook)
Acquisition Price
$2.2M
+ Organic Revenue Growth (15%/yr)
+$2.1M Rev
+ Margin Expansion (to 20% EBITDA)
+$250K EBITDA
+ Multiple Expansion (3.5x → 5.5x)
+$2.0M uplift
Est. Enterprise Value (Year 3)
$5.5M – $7.0M
07 — Final Recommendation
Our Verdict
Verdict: Conditional — Proceed to LOI
Conditional. The real estate anchors value, but the ask prices the OpCo at full SDE. Offer near $1.15M with an earnout tied to verified SDE, financed through a split RE/business loan.
Recommended Next Steps
- Sign the NDA; request 3 years of tax returns, P&Ls, and revenue by customer
- Request seller disclosure of any prior environmental reports and the waste manifests
- Commission a MAI appraisal and Phase I ESA before the LOI goes binding
- Get SBA lender quotes on a split structure: RE at 25-year term, business at 10-year term
- Interview the seller on the transition period, employees, and Raytheon terms
- Submit an LOI with an earnout, a seller note, and environmental/permit contingencies
Suggested Offer Structure
$1,150,000: $975K RE (subject to appraisal) + $175K business, plus up to $150K earnout if verified TTM SDE ≥ $200K. Includes a 10% seller note and 6-month transition.
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Related Resources
Sources
BizBuySell listing #2528136 (Hytech Processing, Inglewood, CA) · CBRE Los Angeles Industrial MarketView, Q3 · SCAQMD Rule 1107 amendment (pCBtF/t-BAc ban by 2033) · DealStream powder coating valuation rules of thumb · BizBuySell SoCal powder coating comparable listings · California DIR minimum wage schedule, 2026